13 ms·

Goldman Sachs, Ozy Media and a $40M conference call gone wrong

254 points by jbegley 5y ago

reginold 5y ago
Wow. "Hey we tried to rip you off like no tomorrow, but got caught. No harm no foul right"? From the article: "When YouTube learned that someone had apparently impersonated one of their executives at a business meeting, its security team started an investigation, the company confirmed to me. The inquiry didn’t get far before a name emerged: Within days, Mr. Watson had apologized profusely to Goldman Sachs, saying the voice on the call belonged to Samir Rao, the co-founder and chief operating officer of Ozy, according to the four people."
- ethbr0 5y ago
  > In his apology to Goldman Sachs and in an email to me on Friday, Mr. Watson attributed the incident to a mental health crisis and shared what he said were details of Mr. Rao’s diagnosis. “Samir is a valued colleague and a close friend,” Mr. Watson said. “I’m proud that we stood by him while he struggled, and we’re all glad to see him now thriving again.” He added that Mr. Rao took time off from work after the call and is now back at Ozy. Mr. Rao did not reply to requests for comment. WTF?! This is immaterial on the company's value (it may be successful despite), but how is the individual in question still employed at the company? I've gone through some low points, but never have I attempted to impersonate another company's executive in order certify traffic claims and secure funding. Jesus.
  - blitzar 5y ago
    https://en.wikipedia.org/wiki/Insanity_defense https://en.wikipedia.org/wiki/Insanity_defense > The notion of temporary insanity argues that a defendant was insane during the commission of a crime, but they later regained their sanity after the criminal act was carried out. This legal defense is commonly used to defend individuals that have committed crimes of passion. The defense was first successfully used by U.S. Congressman Daniel Sickles of New York in 1859 after he had killed his wife's lover, Philip Barton Key. Of course the first successfull use would be a politician.
    - ethbr0 5y ago
      Yes, but a (even temporary, which is rarer than TV would lead you to believe) insanity plea typically requires institution at a mental health care facility. It certainly doesn't just place the individual back in their old job.
      - cactus2093 5y ago
        Wait until you learn about San Francisco
        blitzar 5y ago
        My batting average is 1.000, if I can claim every strikeout was a temporary mental health anomaly.
        ethbr0 5y ago
        San Francisco and I have a history of disagreement. :)
  - reginold 5y ago
    How is this immaterial? The two co-founders tried to defraud an investor.
    - ethbr0 5y ago
      IMHO, attempting to defraud an investor demonstrates a complete lack of ethics. It does not necessarily follow that your company is inherently fraudulent or worthless. Lots of terrible people run financially solid companies. Would I invest a dime? Hell no. But it doesn't mean that it's not a valuable company.
      - elliekelly 5y ago
        If it’s a solid company run by ethically challenged people then the board can (and should) fire the terrible people and replace them with better people. If the company’s only “value” comes from the terrible people being in charge then it is indeed a terrible company.
      - reginold 5y ago
        Ah I see what you mean now. What you mean is this event doesn't technically mean the entire company is a scam that has no clicks. It's possible all their traffic is organic and uses iOS and loves clicking ads, just that the CEO and co-founders conspired to impersonate this YouTube exec. Yes, it could technically still be a valuable company.
        ethbr0 5y ago
        Unlikely to be valuable, but lying and bankruptcy are two different things. And I try and be pendantic, as "(Proven bad thing), so (worse thing that doesn't logically follow)" appears to be the paintbrush of our times.
  - vkou 5y ago
    > but how is the individual in question still employed at the company? The company is worthless unless the founders realize their vision, and investors who were already suckered into funding it don't want to rock the boat, because it will make their entire investment evaporate.
  - paxys 5y ago
    He is still employed because the entire company, and their existing investors, were all in on the scam. If they make him the fall guy he will dish out dirt on them in return.
    - danrocks 5y ago
      Right on. As a friend of mine said, he hasn't been fired because he has all the receipts.
      - effingwewt 5y ago
        Yes this was a case of it being blatantly obvious, too. They should have gleefully thrown him under the bus, if only to allay suspicion. The fact they can't/won't screams complicity. This males me wonder what else will develop from this now that they've gotten the attention they very much wanted to avoid.
- blitzar 5y ago
  But did they still do the deal? Just how thirsty are Goldmans to do deals in this space is the thing I want to know.
  - frakkingcylons 5y ago
    That’s answered in the article.
    - deleted 5y ago
      [deleted]
    - blitzar 5y ago
      They 'walked away' and then the deal got done 2 months later - there are no details on who did the deal.
  - TechBro8615 5y ago
    Hint: Goldman's definition of "this space" is much more about the "who" than the "what"
danso 5y ago
Free to read link: https://www.nytimes.com/2021/09/26/business/media/ozy-media-goldman-sachs.html?unlocked_article_code=AAAAAAAAAAAAAAAACEIPuonUktbfqohkQVUZBSbfQMMmqBCdnr_KzbA9jzj5PjnQTDtOzu1QDI-E90LEY-94btAzxHKbWNpFevcJdcBF89V-bQZrWhX65dyNgogEKCE47o6-BTs6j5uXGL1grWWvMzfkeKJ1mOzv-k3eb2K5WPCJgnEmLB134scwLSHc0ncMz6bBFe5niJIpjbp6WMcMFXpXbzKKvvLrFxx1JN6DCxnb4QQzUOxbMirByZ_es_lTNVUPVi-VCS938m0-69tDONoIPK6ZLxIofcT2hLx5GXWR77u5GUMfQ1k5tEk6Prar&smid=url-share https://www.nytimes.com/2021/09/26/business/media/ozy-media-...
treebog 5y ago
https://archive.is/zMvoW https://archive.is/zMvoW
CPLX 5y ago
Besides the likely felony of the call impersonation, this part jumps out too: In 2017, BuzzFeed News reported that Ozy had been among the publishers buying web traffic from “low-quality sources,” companies using systems that caused articles to pop open under a reader’s browser without the reader’s knowledge. They aren't elaborating but it seems clear that the company has been buying fake traffic for everything they do, which is a core issue.
elliekelly 5y ago
> While the explanation satisfied the company’s board, which did not formally investigate, it did not answer all the questions the incident raised. I struggle to understand how these board members think they’re fulfilling their duties. When you learn management is committing crimes in order to raise funds it doesn’t seem reasonable to then take management’s explanation at face value after they’ve been caught.
- jrumbut 5y ago
  If someone is robbing Peter to pay Paul, Paul doesn't have much motivation to stop the robbery.
- e1g 5y ago
  Counter-intuitively, the board is fulfilling the duty of loyalty by protecting the business. Matt Levine puts it well [1] - What if this had worked? What if Goldman hadn’t noticed anything unusual and had coughed up the $40 million? Wouldn’t Goldman have been embarrassed when this story came out? Well, no, because this story never would have come out! [...] Once you’ve been tricked into investing in a high-flying startup, the only rational move is to hope that they succeed, clean up their act and go public at a higher valuation. You’d never go around saying “we were tricked”; that just destroys value. Similarly, if you are an investor and board member of a hot startup, and you find out that the co-founder impersonated a customer to try to trick someone into investing, what are your incentives? If you make a big deal about it and throw around words like “fraud,” it will be hard for the startup ever to raise money again, which might make your own investment worthless. If you say, meh, unfortunate one-time event, no harm no foul, then maybe the company’s vision will end up working out and you’ll be able to sell at a profit. If you invest in a startup you are buying an option; your goal, as a board member, is not to extinguish the option value too soon. Just, you know, let it ride, see where this goes. [1] https://www.bloomberg.com/opinion/articles/2021-09-27/impostors-on-the-due-diligence-call https://www.bloomberg.com/opinion/articles/2021-09-27/impost...
  - elliekelly 5y ago
    I think it's important to remember that some (most?) of what Levine writes is tongue-in-cheek. There Levine discusses the practical consequences and board's incentives but in no way is he saying the board has fulfilled their legal obligations. Not even facetiously.
say_it_as_it_is 5y ago
What are the odds that they outsourced youtube views to view farms in third world countries?
Igelau 5y ago
> “Samir is a valued colleague and a close friend,” Mr. Watson said. “I’m proud that we stood by him while he struggled, and we’re all glad to see him now thriving again.” Wow, that positive spin is a stretch.
- CPLX 5y ago
  It's way worse than that even. The CEO is the one that provided what's obviously a fake email address for the Youtube executive. When you read this paragraph the only plausible scenario is that the CEO was actively involved in this whole idea of faking the conference call: After the meeting, someone on the Goldman Sachs side reached out to Mr. Piper, not through the Gmail address that Mr. Watson had provided before the meeting, but through Mr. Piper’s assistant at YouTube. That’s when things got weird.
- duxup 5y ago
  Wasn't it great how Sunny stood by Elizabeth Holmes while they stood to make money by lying? /s
JackFr 5y ago
Impersonating someone while soliciting investment is fraud, pure and simple. I can't believe Goldman would even take their calls after that -- not that Goldman aren't greedy bastards, but that a company that pulls crap like that are very unlikely to be a good investment in the long run.
pranavjoneja 5y ago
Bloomberg's Matt Levine has an interesting take: > Here’s another thing about being a private company. What if this had worked? What if Goldman hadn’t noticed anything unusual and had coughed up the $40 million? Wouldn’t Goldman have been embarrassed when this story came out? Well, no, because this story never would have come out! Even if someone had told Goldman after the fact “hey that call with YouTube was fake,” what would they have done about it? They could call Ozy and demand their money back but presumably Ozy spent it. They could sue, but how much would they be able to recover? Once you’ve been tricked into investing in a high-flying startup, the only rational move is to hope that they succeed, clean up their act and go public at a higher valuation. You’d never go around saying “we were tricked”; that just destroys value. > Similarly, if you are an investor and board member of a hot startup, and you find out that the co-founder impersonated a customer to try to trick someone into investing, what are your incentives? If you make a big deal about it and throw around words like “fraud,” it will be hard for the startup ever to raise money again, which might make your own investment worthless. If you say, meh, unfortunate one-time event, no harm no foul, then maybe the company’s vision will end up working out and you’ll be able to sell at a profit. If you invest in a startup you are buying an option; your goal, as a board member, is not to extinguish the option value too soon. Just, you know, let it ride, see where this goes. https://www.bloomberg.com/opinion/articles/2021-09-27/impostors-on-the-due-diligence-call https://www.bloomberg.com/opinion/articles/2021-09-27/impost...
reginold 5y ago
Help me understand, what is so damaging in YouTube data that you risk the entire company to hide it? The idea is all the traffic is fake. Does that somehow get exposed by the YouTube call in a way that otherwise is not possible?
- AJ007 5y ago
  It’s all bot or paid traffic. Never heard of them before this article. This was a good quote: “I’ve never heard an explanation of Ozy that made sense to me,” said Brian Morrissey, the former editor in chief of Digiday, a publication covering digital media and the tech industry, who now writes The Rebooting, a newsletter focused on media businesses. He said he was struck by the company’s claims, adding, “then you do the gut check, and never once in my life has a piece of content from Ozy crossed into my world organically.”
- blitzar 5y ago
  > Help me understand, what is so damaging in YouTube data that you risk the entire company to hide it? That the majority of their YouTube videos get 10's or 100's of views. But then you can see that just by looking at the channel.
htrp 5y ago
Basically a company using a "mental health" issue to cover for the one time they got caught committing ad-fraud.
- hangonhn 5y ago
  Yeah. That really, really did not sit well with me. The use of mental health care issues as an excuse for some immoral, unethical behavior is really quite offensive. There are so, so, so many people who have mental health care issues who do not commit fraud nor behave immorally.
cs702 5y ago
So, one of Ozy's top two executives impersonated a senior YouTube executive, apparently using voice-modification technology, to answer questions in a due diligence phone call initiated by Goldman Sachs, who was considering investing $40M in the company. First of all, wow. That takes a lot -- a lot -- of chutzpah. And a lot of arrogance too. Second, Ozy's board of directors described this reckless con as a "mistake." Apparently the impersonator is still at Ozy. (Wait... What?) Third, I'm reminded of the later stages of the residential mortgage market bubble, in which the zeitgeist was captured by the phrase "extend and pretend." The zeitgeist now may be best described as "fake it and pretend." Again, wow.
- ryandrake 5y ago
  Shades of Theranos with this one. It's so sad that hard working, smart technologists struggle through and at best maybe make a decent living at a good tech company, yet smooth-talking phonies like these guys and Elizabeth Holmes and Adam Neumann just get money thrown at them and can never fail. Why? Because they wear turtlenecks and have the right prestigious college names on their resume?
  - dannylandau 5y ago
    A bit off topic, but why do people conflate Elizabeth Holmes with Adam Neumann (and Travis Kalanick), completely different issues, one is fraud and the other is just a failed IPO that included some hyperbole, nothing more. No comparison.
    - thaumasiotes 5y ago
      Adam Neumann is not Elizabeth Holmes, but there is more to his story than "a failed IPO that included some hyperbole".
    - ashtonkem 5y ago
      Arguably Neumann was a fraud, he just got away with it. WeWork’s books were thoroughly cooked, and he managed to extract an inappropriate amount of wealth from it via his role, up to and including making the company lease land from him, and (attempting) to force the company to license its own brand from him personally.
Fede_V 5y ago
Reading that story, I wonder where hustle culture went wrong. Paul Graham famously celebrated "breaking the rules" (http://www.paulgraham.com/founders.html http://www.paulgraham.com/founders.html) - but - this is a crazy ratchet. I really hope that this behaviour doesn't become any more normalized than it already has. Success is not worth anything, and, while some rules may be pointless, not every rule (and norm) is an obstacle you have to hack around on your way to success.
- paxys 5y ago
  It was never right. It's easy for the "winners" to look back and justify their actions, but the entire culture was always rife with such scams.
- thepgmess 5y ago
  PG is no saint. It's people like him who go around preaching borderline fraud in the name of so called hustle.
ethbr0 5y ago
Incidentally, guess what made today's Money Stuff newsletter? https://www.bloomberg.com/opinion/articles/2021-09-27/impostors-on-the-due-diligence-call https://www.bloomberg.com/opinion/articles/2021-09-27/impost...
- blitzar 5y ago
  >I am appalled, sure, but honestly I also admire it a bit. I feel like there is some threshold of absolute shamelessness that most companies cannot even aspire to, but if you reach it then either you blow up in short order or you take over the world. I’ll probably be working for Ozy in a year.
moralestapia 5y ago
LOL, you can only laugh when you see this kind of story while the average joe struggles with life at just the slightest mistake. When I was a student (but under a contract nonetheless) I was once threatened with termination because I took off my shoes while at my desk on a Friday at around 6pm (everyone left at 4pm, but I wanted to finish something that bugged me the whole week). Another guy next to me noticed it (trust me, there was no foul smell ;)) and it filed a report on misbehavior. What ensued was one of the most bizarre episodes I ever experienced with regards to "corporate life" (although I was in academy but w/e). I got several emails from people that were somehow involved in that chain of command condemning the action; plus I had to go through two serious conversations regarding the incident, one with my direct supervisor and another one with the director of the whole faculty (!), where he took his time to explain to me how no one would like to employ somebody who displays such unprofessional behavior, etcetera ... Turns out that, for some people, it is a big deal if you take off your shoes, while sitting at your desk, on your office, on a Friday night. ¯\_(ツ)_/¯ Fast forward to today and (quoting the great Mark Levine): "The CEO of the company gave a potential investor a fake email address for a big customer, and then the COO digitally altered his voice to impersonate that customer on a call with the investor [...]" but "[...] the board decided not to investigate because ... they were satisfied that this was just a one-time thing, a little oopsie, everything else that the company does is completely aboveboard, and anyway no harm no foul" Whew! We all play the same game, right? Just not under the same rules.
- ForHackernews 5y ago
  I used to work as a cashier, and I once got written up because I was $20 short when I counted down my drawer at the end of a busy 8 hour shift. They told me I'd be fired if I was more than $10 off a second time.
  - PakG1 5y ago
    This type of management, but taken to the extreme. https://www.theverge.com/2021/4/23/22399721/uk-post-office-software-bug-criminal-convictions-overturned https://www.theverge.com/2021/4/23/22399721/uk-post-office-s... People need to stop jumping to negative conclusions.
gpayan 5y ago
2 ex-Goldman Sachs employees attempting to defraud Goldman Sachs, who in return takes no actions. "Good try guys, honestly everyone on the team here at GS would have done the same thing. But you know that, you worked here."
wanderingmind 5y ago
Why would anyone reachout to a Google executive over a personal gmail address. Don't they have an official Google or youtube email? That alone must have raised eyebrows for GS folks who are described as the best in business. But hey all is good if no money is lost right.
malkia 5y ago
Before reading this, I was really thinking of Ozzfest and Ozzy! - lol - I must read the article fully tonight, because I was laughing half-way through, and could not comprehend fully wtf was going on... this is too much
- wiredfool 5y ago
  I’m thinking giant statue in the dessert, lost and forgotten, like tears in the rain.
mvind 5y ago
"The president of the Ford Foundation, Mr. Walker, said in an email that he had confidence in Ozy. “We need new media companies to challenge the status quo, shake things up, and go deep on the issues that matter most,” he said. “In an increasingly diverse world, it’s no coincidence that a company with co-founders of Black and Indian descent would be so successful.” Remember this is the sort person investing capital nowadays..
- hogFeast 5y ago
  Not an investor. Never worked as an investor. Only worked for charities. Marc Lasry, however, is a very well-known investor. Investing and charity does seem to be merging in quite a puzzling way. Saying that this company has been "so successful" after the founders have been caught committing fraud (not in the legal sense) is inexplicable. I worked in finance. If this happened at a company that I recommended, I would have lost my job (I actually know a fund manager who had a well-publicised 5% position in a company that failed, they had institutional money only so the reaction was swift...50% drop in AUM, investors demanded they fire 75% of the analyst team...this does happen in finance). I guess not everyone has to play by those rules. Ironically, it sounds just like old media. Pay a few good 'ol boys to put out the stuff I like and agree with. I will lose all my money but...who cares?
- TechBro8615 5y ago
  I’m glad someone is pointing this out. The article makes it sound like the accused company is wrapped up in a lot of social justice propaganda. Hucksters like this CEO know how to leverage woke messaging to their benefit. Woke is good for business. That their first instinct was to frame the excuse as empathy for an employee struggling with a “mental health episode” says it all. They know their audience. Their YouTube Channel [1] makes it immediately obvious they do not have anything close to a consistent viewership audience of millions. Anyone who invested in this should fire their entire due diligence staff. Existing investors are the main idiots here, with Goldman only redeeming themselves at the last minute. YouTube doesn’t have much skin (no pun intended) in the game. Nobody is gonna pursue this further because it will look bad. [1] https://www.youtube.com/OZY https://www.youtube.com/OZY
tweedledee 5y ago
My only encounters with Ozy have been overly glowing unlabeled promotional articles on various up and coming tech entrepreneurs.
themgt 5y ago
Little gem from a (paywalled) WaPo story a few years ago: [Hillary] Clinton herself is here at Ozy Fest, in a flowing sky-blue caftan and white linen pants, looking like she was choppered in from East Hampton. For 45 minutes, she is the president of this little plot of Central Park, astride the ritziest Zip code in New York City, a bubble within a bubble within a bubble. Her interlocutor is billionaire philanthropist Laurene Powell Jobs, the sixth richest woman on the planet and a primary investor in Ozy Media, whose name comes from the Percy Bysshe Shelley poem 'Ozymandias' https://www.washingtonpost.com/lifestyle/style/inside-ozy-fest-the-progressive-alternate-reality-where-the-brands-outshine-the-ideas/2018/07/23/4d6734f4-8e0e-11e8-8322-b5482bf5e0f5_story.html https://www.washingtonpost.com/lifestyle/style/inside-ozy-fe...
- Uhhrrr 5y ago
  Jobs also has put money into The Atlantic, Axios, Mother Jones, and ProPublica. None of these are cash cows. So maybe she doesn't care so much about traffic numbers.
- jessaustin 5y ago
  "Nothing beside remains. Round the decay Of that colossal wreck, boundless and bare The lone and level sands stretch far away."
  - cafard 5y ago
    Back in 2016, somebody came up with "Hillymandias", suitably adapted to her situation. But it seems to have disappeared entirely from the internet.
    - jessaustin 5y ago
      For more poetry see the end of the WaPo link above.
TechBro8615 5y ago
Statement from the CEO: https://twitter.com/carloswatson/status/1442351771544735749 https://twitter.com/carloswatson/status/1442351771544735749
- devrand 5y ago
  > Why was Ozy trying to mislead Goldman about its relationship with YouTube? > We were not. WHAT!? Even if I were to accept the mental health claim, that's only going to cover the lapse in judgement. I don't think it's reasonable to deflect on their being an intent to mislead Goldman by literally impersonating a senior YouTube executive to boast about your company. Simply saying "we were not" is really not a defense here.
- stickfigure 5y ago
  Wow, how stupid does he think we are? 1. Attack the messenger. 2. Shut down inquiry by reframing a brazen fraud attempt as a medical issue. 3. Deny everything. Fraud, fraud, fraud. Elizabeth Holmes would be proud.
IceHegel 5y ago
Their view botting is insanely obvious. I found these videos in 30 seconds, all over 1m views and less than 20 comments. - https://www.youtube.com/watch?v=CdazNWPT-aM https://www.youtube.com/watch?v=CdazNWPT-aM - https://www.youtube.com/watch?v=waZlYPzMJ28 https://www.youtube.com/watch?v=waZlYPzMJ28 - https://www.youtube.com/watch?v=YWg6kF-y6d4 https://www.youtube.com/watch?v=YWg6kF-y6d4
- Sebb767 5y ago
  I'm surprised YouTube doesn't crack down on this. On the other hand, they might have just asked for a closer inspection.
  - muglug 5y ago
    I bet placing an advert as a pre-roll counts towards a YouTube video's view count. That would explain the format of the last video — a brief teaser for that 5-second countdown. I bet Ozy has next-to-zero organic traffic to any of its properties.
  - bambax 5y ago
    YouTube doesn't crack down on anything unless they positively, absolutely have to in order to avoid a full-scale scandal.
- jonas21 5y ago
  It's not necessarily bots. They could just be buying views with ads.
  - IceHegel 5y ago
    Their COO pretended to work for YouTube. After something like that, you lose the benefit of the doubt.
sharadov 5y ago
Youtube notified the FBI and they are investigating, I don't think this is going to die down as the powers be expected it to.
- deleted 5y ago
  [deleted]
spamizbad 5y ago
Whoa. Good hustle!
iaw 5y ago
I really wish we could evaluate the cost of these types of frauds. The article hints that there may be more fishy with Ozy Media than this one call. An easier example for my concern is Theranos. How many legit companies didn't get funded because Theranos was lying and getting funded? How many viable alternatives were killed?
hn_throwaway_99 5y ago
> And one nagging question in this era of spectacular booms and busts is where, exactly, the line is drawn between fake-it-til-you-make-it hype (Tesla!) and possible fraud (Theranos!). That line is often blurry and comes into focus only in retrospect. I'm getting extremely sick of the media continually trying to imply that the "line" between gross, outright fraud, and overly optimistic deadline setting is somehow "blurry". It's not. I've worked for startups my entire career, and while yes, I've seen execs many times spin things in a positive light, I have never seen anything approaching the clear, blatant fraud as was the case with Theranos, or as is the case here with this bizarre "Ferris Bueller's Day Off" impersonation skit. Elizabeth Holmes didn't just overpromise on a future vision and then fail to deliver. She actively lied about the current state of her product, saying her product did something when it unambiguously did not. To contrast, I have many issues with Elon Musk, and he certainly over promises, and I certainly DO believe that some of his tweets ("funding secured" anyone?) have crossed the line, but I don't ever recall him saying "I have a rocket that can fly" but instead just throw a rocket out of an airplane and videotape it, which is basically what Nikola did when they rolled their truck downhill.

254 points by jbegley 5y ago

Wow. "Hey we tried to rip you off like no tomorrow, but got caught. No harm no foul right"? From the article: "When YouTube learned that someone had apparently impersonated one of their executives at a business meeting, its security team started an investigation, the company confirmed to me. The inquiry didn’t get far before a name emerged: Within days, Mr. Watson had apologized profusely to Goldman Sachs, saying the voice on the call belonged to Samir Rao, the co-founder and chief operating officer of Ozy, according to the four people."

ethbr0 5y ago
> In his apology to Goldman Sachs and in an email to me on Friday, Mr. Watson attributed the incident to a mental health crisis and shared what he said were details of Mr. Rao’s diagnosis. “Samir is a valued colleague and a close friend,” Mr. Watson said. “I’m proud that we stood by him while he struggled, and we’re all glad to see him now thriving again.” He added that Mr. Rao took time off from work after the call and is now back at Ozy. Mr. Rao did not reply to requests for comment. WTF?! This is immaterial on the company's value (it may be successful despite), but how is the individual in question still employed at the company? I've gone through some low points, but never have I attempted to impersonate another company's executive in order certify traffic claims and secure funding. Jesus.
- blitzar 5y ago
  https://en.wikipedia.org/wiki/Insanity_defense https://en.wikipedia.org/wiki/Insanity_defense > The notion of temporary insanity argues that a defendant was insane during the commission of a crime, but they later regained their sanity after the criminal act was carried out. This legal defense is commonly used to defend individuals that have committed crimes of passion. The defense was first successfully used by U.S. Congressman Daniel Sickles of New York in 1859 after he had killed his wife's lover, Philip Barton Key. Of course the first successfull use would be a politician.
  - ethbr0 5y ago
    Yes, but a (even temporary, which is rarer than TV would lead you to believe) insanity plea typically requires institution at a mental health care facility. It certainly doesn't just place the individual back in their old job.
    - cactus2093 5y ago
      Wait until you learn about San Francisco
      - blitzar 5y ago
        My batting average is 1.000, if I can claim every strikeout was a temporary mental health anomaly.
      - ethbr0 5y ago
        San Francisco and I have a history of disagreement. :)
- reginold 5y ago
  How is this immaterial? The two co-founders tried to defraud an investor.
  - ethbr0 5y ago
    IMHO, attempting to defraud an investor demonstrates a complete lack of ethics. It does not necessarily follow that your company is inherently fraudulent or worthless. Lots of terrible people run financially solid companies. Would I invest a dime? Hell no. But it doesn't mean that it's not a valuable company.
    - elliekelly 5y ago
      If it’s a solid company run by ethically challenged people then the board can (and should) fire the terrible people and replace them with better people. If the company’s only “value” comes from the terrible people being in charge then it is indeed a terrible company.
    - reginold 5y ago
      Ah I see what you mean now. What you mean is this event doesn't technically mean the entire company is a scam that has no clicks. It's possible all their traffic is organic and uses iOS and loves clicking ads, just that the CEO and co-founders conspired to impersonate this YouTube exec. Yes, it could technically still be a valuable company.
      - ethbr0 5y ago
        Unlikely to be valuable, but lying and bankruptcy are two different things. And I try and be pendantic, as "(Proven bad thing), so (worse thing that doesn't logically follow)" appears to be the paintbrush of our times.
- vkou 5y ago
  > but how is the individual in question still employed at the company? The company is worthless unless the founders realize their vision, and investors who were already suckered into funding it don't want to rock the boat, because it will make their entire investment evaporate.
- paxys 5y ago
  He is still employed because the entire company, and their existing investors, were all in on the scam. If they make him the fall guy he will dish out dirt on them in return.
  - danrocks 5y ago
    Right on. As a friend of mine said, he hasn't been fired because he has all the receipts.
    - effingwewt 5y ago
      Yes this was a case of it being blatantly obvious, too. They should have gleefully thrown him under the bus, if only to allay suspicion. The fact they can't/won't screams complicity. This males me wonder what else will develop from this now that they've gotten the attention they very much wanted to avoid.
blitzar 5y ago
But did they still do the deal? Just how thirsty are Goldmans to do deals in this space is the thing I want to know.
- frakkingcylons 5y ago
  That’s answered in the article.
  - deleted 5y ago
    [deleted]
  - blitzar 5y ago
    They 'walked away' and then the deal got done 2 months later - there are no details on who did the deal.
- TechBro8615 5y ago
  Hint: Goldman's definition of "this space" is much more about the "who" than the "what"

danso 5y ago

Free to read link: https://www.nytimes.com/2021/09/26/business/media/ozy-media-goldman-sachs.html?unlocked_article_code=AAAAAAAAAAAAAAAACEIPuonUktbfqohkQVUZBSbfQMMmqBCdnr_KzbA9jzj5PjnQTDtOzu1QDI-E90LEY-94btAzxHKbWNpFevcJdcBF89V-bQZrWhX65dyNgogEKCE47o6-BTs6j5uXGL1grWWvMzfkeKJ1mOzv-k3eb2K5WPCJgnEmLB134scwLSHc0ncMz6bBFe5niJIpjbp6WMcMFXpXbzKKvvLrFxx1JN6DCxnb4QQzUOxbMirByZ_es_lTNVUPVi-VCS938m0-69tDONoIPK6ZLxIofcT2hLx5GXWR77u5GUMfQ1k5tEk6Prar&smid=url-share https://www.nytimes.com/2021/09/26/business/media/ozy-media-...

treebog 5y ago

https://archive.is/zMvoW https://archive.is/zMvoW

CPLX 5y ago

Besides the likely felony of the call impersonation, this part jumps out too: In 2017, BuzzFeed News reported that Ozy had been among the publishers buying web traffic from “low-quality sources,” companies using systems that caused articles to pop open under a reader’s browser without the reader’s knowledge. They aren't elaborating but it seems clear that the company has been buying fake traffic for everything they do, which is a core issue.

elliekelly 5y ago

> While the explanation satisfied the company’s board, which did not formally investigate, it did not answer all the questions the incident raised. I struggle to understand how these board members think they’re fulfilling their duties. When you learn management is committing crimes in order to raise funds it doesn’t seem reasonable to then take management’s explanation at face value after they’ve been caught.

jrumbut 5y ago
If someone is robbing Peter to pay Paul, Paul doesn't have much motivation to stop the robbery.
e1g 5y ago
Counter-intuitively, the board is fulfilling the duty of loyalty by protecting the business. Matt Levine puts it well [1] - What if this had worked? What if Goldman hadn’t noticed anything unusual and had coughed up the $40 million? Wouldn’t Goldman have been embarrassed when this story came out? Well, no, because this story never would have come out! [...] Once you’ve been tricked into investing in a high-flying startup, the only rational move is to hope that they succeed, clean up their act and go public at a higher valuation. You’d never go around saying “we were tricked”; that just destroys value. Similarly, if you are an investor and board member of a hot startup, and you find out that the co-founder impersonated a customer to try to trick someone into investing, what are your incentives? If you make a big deal about it and throw around words like “fraud,” it will be hard for the startup ever to raise money again, which might make your own investment worthless. If you say, meh, unfortunate one-time event, no harm no foul, then maybe the company’s vision will end up working out and you’ll be able to sell at a profit. If you invest in a startup you are buying an option; your goal, as a board member, is not to extinguish the option value too soon. Just, you know, let it ride, see where this goes. [1] https://www.bloomberg.com/opinion/articles/2021-09-27/impostors-on-the-due-diligence-call https://www.bloomberg.com/opinion/articles/2021-09-27/impost...
- elliekelly 5y ago
  I think it's important to remember that some (most?) of what Levine writes is tongue-in-cheek. There Levine discusses the practical consequences and board's incentives but in no way is he saying the board has fulfilled their legal obligations. Not even facetiously.

say_it_as_it_is 5y ago

What are the odds that they outsourced youtube views to view farms in third world countries?

Igelau 5y ago

> “Samir is a valued colleague and a close friend,” Mr. Watson said. “I’m proud that we stood by him while he struggled, and we’re all glad to see him now thriving again.” Wow, that positive spin is a stretch.

CPLX 5y ago
It's way worse than that even. The CEO is the one that provided what's obviously a fake email address for the Youtube executive. When you read this paragraph the only plausible scenario is that the CEO was actively involved in this whole idea of faking the conference call: After the meeting, someone on the Goldman Sachs side reached out to Mr. Piper, not through the Gmail address that Mr. Watson had provided before the meeting, but through Mr. Piper’s assistant at YouTube. That’s when things got weird.
duxup 5y ago
Wasn't it great how Sunny stood by Elizabeth Holmes while they stood to make money by lying? /s

JackFr 5y ago

Impersonating someone while soliciting investment is fraud, pure and simple. I can't believe Goldman would even take their calls after that -- not that Goldman aren't greedy bastards, but that a company that pulls crap like that are very unlikely to be a good investment in the long run.

pranavjoneja 5y ago

Bloomberg's Matt Levine has an interesting take: > Here’s another thing about being a private company. What if this had worked? What if Goldman hadn’t noticed anything unusual and had coughed up the $40 million? Wouldn’t Goldman have been embarrassed when this story came out? Well, no, because this story never would have come out! Even if someone had told Goldman after the fact “hey that call with YouTube was fake,” what would they have done about it? They could call Ozy and demand their money back but presumably Ozy spent it. They could sue, but how much would they be able to recover? Once you’ve been tricked into investing in a high-flying startup, the only rational move is to hope that they succeed, clean up their act and go public at a higher valuation. You’d never go around saying “we were tricked”; that just destroys value. > Similarly, if you are an investor and board member of a hot startup, and you find out that the co-founder impersonated a customer to try to trick someone into investing, what are your incentives? If you make a big deal about it and throw around words like “fraud,” it will be hard for the startup ever to raise money again, which might make your own investment worthless. If you say, meh, unfortunate one-time event, no harm no foul, then maybe the company’s vision will end up working out and you’ll be able to sell at a profit. If you invest in a startup you are buying an option; your goal, as a board member, is not to extinguish the option value too soon. Just, you know, let it ride, see where this goes. https://www.bloomberg.com/opinion/articles/2021-09-27/impostors-on-the-due-diligence-call https://www.bloomberg.com/opinion/articles/2021-09-27/impost...

reginold 5y ago

Help me understand, what is so damaging in YouTube data that you risk the entire company to hide it? The idea is all the traffic is fake. Does that somehow get exposed by the YouTube call in a way that otherwise is not possible?

AJ007 5y ago
It’s all bot or paid traffic. Never heard of them before this article. This was a good quote: “I’ve never heard an explanation of Ozy that made sense to me,” said Brian Morrissey, the former editor in chief of Digiday, a publication covering digital media and the tech industry, who now writes The Rebooting, a newsletter focused on media businesses. He said he was struck by the company’s claims, adding, “then you do the gut check, and never once in my life has a piece of content from Ozy crossed into my world organically.”
blitzar 5y ago
> Help me understand, what is so damaging in YouTube data that you risk the entire company to hide it? That the majority of their YouTube videos get 10's or 100's of views. But then you can see that just by looking at the channel.

htrp 5y ago

Basically a company using a "mental health" issue to cover for the one time they got caught committing ad-fraud.

hangonhn 5y ago
Yeah. That really, really did not sit well with me. The use of mental health care issues as an excuse for some immoral, unethical behavior is really quite offensive. There are so, so, so many people who have mental health care issues who do not commit fraud nor behave immorally.

cs702 5y ago

So, one of Ozy's top two executives impersonated a senior YouTube executive, apparently using voice-modification technology, to answer questions in a due diligence phone call initiated by Goldman Sachs, who was considering investing $40M in the company. First of all, wow. That takes a lot -- a lot -- of chutzpah. And a lot of arrogance too. Second, Ozy's board of directors described this reckless con as a "mistake." Apparently the impersonator is still at Ozy. (Wait... What?) Third, I'm reminded of the later stages of the residential mortgage market bubble, in which the zeitgeist was captured by the phrase "extend and pretend." The zeitgeist now may be best described as "fake it and pretend." Again, wow.

ryandrake 5y ago
Shades of Theranos with this one. It's so sad that hard working, smart technologists struggle through and at best maybe make a decent living at a good tech company, yet smooth-talking phonies like these guys and Elizabeth Holmes and Adam Neumann just get money thrown at them and can never fail. Why? Because they wear turtlenecks and have the right prestigious college names on their resume?
- dannylandau 5y ago
  A bit off topic, but why do people conflate Elizabeth Holmes with Adam Neumann (and Travis Kalanick), completely different issues, one is fraud and the other is just a failed IPO that included some hyperbole, nothing more. No comparison.
  - thaumasiotes 5y ago
    Adam Neumann is not Elizabeth Holmes, but there is more to his story than "a failed IPO that included some hyperbole".
  - ashtonkem 5y ago
    Arguably Neumann was a fraud, he just got away with it. WeWork’s books were thoroughly cooked, and he managed to extract an inappropriate amount of wealth from it via his role, up to and including making the company lease land from him, and (attempting) to force the company to license its own brand from him personally.

Fede_V 5y ago

Reading that story, I wonder where hustle culture went wrong. Paul Graham famously celebrated "breaking the rules" (http://www.paulgraham.com/founders.html http://www.paulgraham.com/founders.html) - but - this is a crazy ratchet. I really hope that this behaviour doesn't become any more normalized than it already has. Success is not worth anything, and, while some rules may be pointless, not every rule (and norm) is an obstacle you have to hack around on your way to success.

paxys 5y ago
It was never right. It's easy for the "winners" to look back and justify their actions, but the entire culture was always rife with such scams.
thepgmess 5y ago
PG is no saint. It's people like him who go around preaching borderline fraud in the name of so called hustle.

ethbr0 5y ago

Incidentally, guess what made today's Money Stuff newsletter? https://www.bloomberg.com/opinion/articles/2021-09-27/impostors-on-the-due-diligence-call https://www.bloomberg.com/opinion/articles/2021-09-27/impost...

blitzar 5y ago
>I am appalled, sure, but honestly I also admire it a bit. I feel like there is some threshold of absolute shamelessness that most companies cannot even aspire to, but if you reach it then either you blow up in short order or you take over the world. I’ll probably be working for Ozy in a year.

moralestapia 5y ago

LOL, you can only laugh when you see this kind of story while the average joe struggles with life at just the slightest mistake. When I was a student (but under a contract nonetheless) I was once threatened with termination because I took off my shoes while at my desk on a Friday at around 6pm (everyone left at 4pm, but I wanted to finish something that bugged me the whole week). Another guy next to me noticed it (trust me, there was no foul smell ;)) and it filed a report on misbehavior. What ensued was one of the most bizarre episodes I ever experienced with regards to "corporate life" (although I was in academy but w/e). I got several emails from people that were somehow involved in that chain of command condemning the action; plus I had to go through two serious conversations regarding the incident, one with my direct supervisor and another one with the director of the whole faculty (!), where he took his time to explain to me how no one would like to employ somebody who displays such unprofessional behavior, etcetera ... Turns out that, for some people, it is a big deal if you take off your shoes, while sitting at your desk, on your office, on a Friday night. ¯\_(ツ)_/¯ Fast forward to today and (quoting the great Mark Levine): "The CEO of the company gave a potential investor a fake email address for a big customer, and then the COO digitally altered his voice to impersonate that customer on a call with the investor [...]" but "[...] the board decided not to investigate because ... they were satisfied that this was just a one-time thing, a little oopsie, everything else that the company does is completely aboveboard, and anyway no harm no foul" Whew! We all play the same game, right? Just not under the same rules.

ForHackernews 5y ago
I used to work as a cashier, and I once got written up because I was $20 short when I counted down my drawer at the end of a busy 8 hour shift. They told me I'd be fired if I was more than $10 off a second time.
- PakG1 5y ago
  This type of management, but taken to the extreme. https://www.theverge.com/2021/4/23/22399721/uk-post-office-software-bug-criminal-convictions-overturned https://www.theverge.com/2021/4/23/22399721/uk-post-office-s... People need to stop jumping to negative conclusions.

gpayan 5y ago

2 ex-Goldman Sachs employees attempting to defraud Goldman Sachs, who in return takes no actions. "Good try guys, honestly everyone on the team here at GS would have done the same thing. But you know that, you worked here."

wanderingmind 5y ago

Why would anyone reachout to a Google executive over a personal gmail address. Don't they have an official Google or youtube email? That alone must have raised eyebrows for GS folks who are described as the best in business. But hey all is good if no money is lost right.

malkia 5y ago

Before reading this, I was really thinking of Ozzfest and Ozzy! - lol - I must read the article fully tonight, because I was laughing half-way through, and could not comprehend fully wtf was going on... this is too much

wiredfool 5y ago
I’m thinking giant statue in the dessert, lost and forgotten, like tears in the rain.

mvind 5y ago

"The president of the Ford Foundation, Mr. Walker, said in an email that he had confidence in Ozy. “We need new media companies to challenge the status quo, shake things up, and go deep on the issues that matter most,” he said. “In an increasingly diverse world, it’s no coincidence that a company with co-founders of Black and Indian descent would be so successful.” Remember this is the sort person investing capital nowadays..

hogFeast 5y ago
Not an investor. Never worked as an investor. Only worked for charities. Marc Lasry, however, is a very well-known investor. Investing and charity does seem to be merging in quite a puzzling way. Saying that this company has been "so successful" after the founders have been caught committing fraud (not in the legal sense) is inexplicable. I worked in finance. If this happened at a company that I recommended, I would have lost my job (I actually know a fund manager who had a well-publicised 5% position in a company that failed, they had institutional money only so the reaction was swift...50% drop in AUM, investors demanded they fire 75% of the analyst team...this does happen in finance). I guess not everyone has to play by those rules. Ironically, it sounds just like old media. Pay a few good 'ol boys to put out the stuff I like and agree with. I will lose all my money but...who cares?
TechBro8615 5y ago
I’m glad someone is pointing this out. The article makes it sound like the accused company is wrapped up in a lot of social justice propaganda. Hucksters like this CEO know how to leverage woke messaging to their benefit. Woke is good for business. That their first instinct was to frame the excuse as empathy for an employee struggling with a “mental health episode” says it all. They know their audience. Their YouTube Channel [1] makes it immediately obvious they do not have anything close to a consistent viewership audience of millions. Anyone who invested in this should fire their entire due diligence staff. Existing investors are the main idiots here, with Goldman only redeeming themselves at the last minute. YouTube doesn’t have much skin (no pun intended) in the game. Nobody is gonna pursue this further because it will look bad. [1] https://www.youtube.com/OZY https://www.youtube.com/OZY

tweedledee 5y ago

My only encounters with Ozy have been overly glowing unlabeled promotional articles on various up and coming tech entrepreneurs.

themgt 5y ago

Little gem from a (paywalled) WaPo story a few years ago: [Hillary] Clinton herself is here at Ozy Fest, in a flowing sky-blue caftan and white linen pants, looking like she was choppered in from East Hampton. For 45 minutes, she is the president of this little plot of Central Park, astride the ritziest Zip code in New York City, a bubble within a bubble within a bubble. Her interlocutor is billionaire philanthropist Laurene Powell Jobs, the sixth richest woman on the planet and a primary investor in Ozy Media, whose name comes from the Percy Bysshe Shelley poem 'Ozymandias' https://www.washingtonpost.com/lifestyle/style/inside-ozy-fest-the-progressive-alternate-reality-where-the-brands-outshine-the-ideas/2018/07/23/4d6734f4-8e0e-11e8-8322-b5482bf5e0f5_story.html https://www.washingtonpost.com/lifestyle/style/inside-ozy-fe...

Uhhrrr 5y ago
Jobs also has put money into The Atlantic, Axios, Mother Jones, and ProPublica. None of these are cash cows. So maybe she doesn't care so much about traffic numbers.
jessaustin 5y ago
"Nothing beside remains. Round the decay Of that colossal wreck, boundless and bare The lone and level sands stretch far away."
- cafard 5y ago
  Back in 2016, somebody came up with "Hillymandias", suitably adapted to her situation. But it seems to have disappeared entirely from the internet.
  - jessaustin 5y ago
    For more poetry see the end of the WaPo link above.

TechBro8615 5y ago

Statement from the CEO: https://twitter.com/carloswatson/status/1442351771544735749 https://twitter.com/carloswatson/status/1442351771544735749

devrand 5y ago
> Why was Ozy trying to mislead Goldman about its relationship with YouTube? > We were not. WHAT!? Even if I were to accept the mental health claim, that's only going to cover the lapse in judgement. I don't think it's reasonable to deflect on their being an intent to mislead Goldman by literally impersonating a senior YouTube executive to boast about your company. Simply saying "we were not" is really not a defense here.
stickfigure 5y ago
Wow, how stupid does he think we are? 1. Attack the messenger. 2. Shut down inquiry by reframing a brazen fraud attempt as a medical issue. 3. Deny everything. Fraud, fraud, fraud. Elizabeth Holmes would be proud.

IceHegel 5y ago

Their view botting is insanely obvious. I found these videos in 30 seconds, all over 1m views and less than 20 comments. - https://www.youtube.com/watch?v=CdazNWPT-aM https://www.youtube.com/watch?v=CdazNWPT-aM - https://www.youtube.com/watch?v=waZlYPzMJ28 https://www.youtube.com/watch?v=waZlYPzMJ28 - https://www.youtube.com/watch?v=YWg6kF-y6d4 https://www.youtube.com/watch?v=YWg6kF-y6d4

Sebb767 5y ago
I'm surprised YouTube doesn't crack down on this. On the other hand, they might have just asked for a closer inspection.
- muglug 5y ago
  I bet placing an advert as a pre-roll counts towards a YouTube video's view count. That would explain the format of the last video — a brief teaser for that 5-second countdown. I bet Ozy has next-to-zero organic traffic to any of its properties.
- bambax 5y ago
  YouTube doesn't crack down on anything unless they positively, absolutely have to in order to avoid a full-scale scandal.
jonas21 5y ago
It's not necessarily bots. They could just be buying views with ads.
- IceHegel 5y ago
  Their COO pretended to work for YouTube. After something like that, you lose the benefit of the doubt.

sharadov 5y ago

Youtube notified the FBI and they are investigating, I don't think this is going to die down as the powers be expected it to.

deleted 5y ago
[deleted]

spamizbad 5y ago

Whoa. Good hustle!

iaw 5y ago

I really wish we could evaluate the cost of these types of frauds. The article hints that there may be more fishy with Ozy Media than this one call. An easier example for my concern is Theranos. How many legit companies didn't get funded because Theranos was lying and getting funded? How many viable alternatives were killed?

hn_throwaway_99 5y ago

> And one nagging question in this era of spectacular booms and busts is where, exactly, the line is drawn between fake-it-til-you-make-it hype (Tesla!) and possible fraud (Theranos!). That line is often blurry and comes into focus only in retrospect. I'm getting extremely sick of the media continually trying to imply that the "line" between gross, outright fraud, and overly optimistic deadline setting is somehow "blurry". It's not. I've worked for startups my entire career, and while yes, I've seen execs many times spin things in a positive light, I have never seen anything approaching the clear, blatant fraud as was the case with Theranos, or as is the case here with this bizarre "Ferris Bueller's Day Off" impersonation skit. Elizabeth Holmes didn't just overpromise on a future vision and then fail to deliver. She actively lied about the current state of her product, saying her product did something when it unambiguously did not. To contrast, I have many issues with Elon Musk, and he certainly over promises, and I certainly DO believe that some of his tweets ("funding secured" anyone?) have crossed the line, but I don't ever recall him saying "I have a rocket that can fly" but instead just throw a rocket out of an airplane and videotape it, which is basically what Nikola did when they rolled their truck downhill.