9 ms·

Ozy Media Says It Is Shutting Down

86 points by atombender 5y ago

CameronBanga 5y ago
https://archive.is/TpcXg https://archive.is/TpcXg
minimaxir 5y ago
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 https://news.ycombinator.com/item?id=28666350 ) It took 5 days from publishing to a complete company shutdown.
- deleted 5y ago
  [deleted]
- larsiusprime 5y ago
  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.
  - d3nj4l 5y ago
    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.
    - JumpCrisscross 5y ago
      > 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 for running a forgiving 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.
  - janmo 5y ago
    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.
  - rchaud 5y ago
    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. You can't bounce back from something like that. [0] https://edition.cnn.com/2021/09/30/media/ozy-work-culture/index.html https://edition.cnn.com/2021/09/30/media/ozy-work-culture/in...
- janmo 5y ago
  Every day brought its toll of new revelations. And I guess it is far from over. "18-hour days and panic attacks: Former Ozy staffers allege an abusive environment" - https://edition.cnn.com/2021/09/30/media/ozy-work-culture/index.html https://edition.cnn.com/2021/09/30/media/ozy-work-culture/in... "How troubled media firm Ozy was 'saved' from Fyre Festival-style exposure in 2019 after heat wave canceled Central Park event" - https://www.dailymail.co.uk/news/article-10043157/Ozy-saved-Fyre-Festival-style-disaster-Blasio-canceled-2019-event-heat.html https://www.dailymail.co.uk/news/article-10043157/Ozy-saved-... "Ozy Built a TV Show on a False Claim, Says Its Former Producer " - https://www.nytimes.com/2021/09/30/business/media/ozy-media-carlos-watson.html https://www.nytimes.com/2021/09/30/business/media/ozy-media-...
  - wolverine876 5y ago
    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.
    - janmo 5y ago
      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.
    - filmgirlcw 5y ago
      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.
- npunt 5y ago
  Yeah that is a super fast turnaround. Guess it's easy when there's no there there.
ilamont 5y ago
It sounds like the COO may be charged with fraud. The "mental health" claim will not shield him. Or, the feds will try to flip him. Beware of charismatic CEOs spinning big tales.
- dredmorbius 5y ago
  "Going off the rails on a crazy train" would also be infringing on an earlier similarly-named media franchise. Tots derivative.
- janmo 5y ago
  I guess the CEO will be charged as well, he cannot deny that he did not knew.
- paxys 5y ago
  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.
paulpauper 5y ago
I wonder what the impersonation audio sounded like. was it robotic or obvious like Stephen Hawking's voice or something anyway, we're talking 1/100 the size of theranos, so could be worse
- stickfigure 5y ago
  83M? Isn't that 1/10 of Theranos?
  - paulpauper 5y ago
    no, it was worth around 10 billion at peak
    - stickfigure 5y ago
      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.
Mizza 5y ago
I've got to say I've enjoyed watching this whole thing implode. They set out to be the "Uber of media", but ended up being the Theranos. I really hope we're starting to see the end of the "fake it till you make it" era.
dredmorbius 5y ago
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. https://en.wikipedia.org/wiki/OZY_(media_company) https://en.wikipedia.org/wiki/OZY_(media_company) I'll note that it didn't even rate mention on HN until the past week as well.
- Mizza 5y ago
  I've only been aware of it since the RS article where the writer went to OzyFest on acid with the Chapo bros: https://www.rollingstone.com/culture/culture-features/a-neoliberal-nightmare-at-ozy-fest-2018-702600/ https://www.rollingstone.com/culture/culture-features/a-neol... Nightmare fuel.
  - dredmorbius 5y ago
    Even RS confuse the media scam with the rocker. See "In this story" on that article. Ozy != Ozzy
- wolverine876 5y ago
  > Wikipedia as usual has a decent overview IMO, it always reads decently, but I never know what is missing and what parts are accurate.
  - dredmorbius 5y ago
    Offering a superior reference would be more substantive than making vague unsubstantiated assertions of innacuracy.
Apocryphon 5y ago
Nothing beside remains.
- dredmorbius 5y ago
  Bysshe!
deleted 5y ago
[deleted]
janmo 5y ago
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 that 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... Edit: this was the state of my knowledge back in 2017, I've googled what happened since. He had to step down from his functions, was convicted to pay a fine for running a company despite having being bared to do so. There is also a civil suit against him that has not been settled yet it seems. It does not look like that he was charged with fraud or anything else than running a company despite being bared to do so. It appears that he has started a new business in the Crypto space now. Note that this story happened in Germany and you don't go to jail easily here. His former startup went bankrupt but was acquired out of bankruptcy and found a new owner. He reduced the employee count from 100 to 20, scrapped all expansion plans to refocus on its core market and was able to make the company profitable in 2019.
- andreilys 5y ago
  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.
  - janmo 5y ago
    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.
    - bellyfullofbac 5y ago
      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..
zthrowaway 5y ago
Breaking Points did a good segment on this: https://youtu.be/1pE9yqE5yMk https://youtu.be/1pE9yqE5yMk
Apocryphon 5y ago
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? Really looking forward to the Ozy documentary.
wolverine876 5y ago
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.
csilverman 5y ago
“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.
- syndacks 5y ago
  https://poets.org/poem/ozymandias https://poets.org/poem/ozymandias
malkia 5y ago
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...
jiscariot 5y ago
You have to give it to the NYT, they have amazing investigative coverage on any entity that threatens their profit model.
rchaud 5y ago
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.

86 points by atombender 5y ago

https://archive.is/TpcXg https://archive.is/TpcXg

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 https://news.ycombinator.com/item?id=28666350 ) It took 5 days from publishing to a complete company shutdown.

deleted 5y ago
[deleted]
larsiusprime 5y ago
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.
- d3nj4l 5y ago
  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.
  - JumpCrisscross 5y ago
    > 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 for running a forgiving 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.
- janmo 5y ago
  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.
- rchaud 5y ago
  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. You can't bounce back from something like that. [0] https://edition.cnn.com/2021/09/30/media/ozy-work-culture/index.html https://edition.cnn.com/2021/09/30/media/ozy-work-culture/in...
janmo 5y ago
Every day brought its toll of new revelations. And I guess it is far from over. "18-hour days and panic attacks: Former Ozy staffers allege an abusive environment" - https://edition.cnn.com/2021/09/30/media/ozy-work-culture/index.html https://edition.cnn.com/2021/09/30/media/ozy-work-culture/in... "How troubled media firm Ozy was 'saved' from Fyre Festival-style exposure in 2019 after heat wave canceled Central Park event" - https://www.dailymail.co.uk/news/article-10043157/Ozy-saved-Fyre-Festival-style-disaster-Blasio-canceled-2019-event-heat.html https://www.dailymail.co.uk/news/article-10043157/Ozy-saved-... "Ozy Built a TV Show on a False Claim, Says Its Former Producer " - https://www.nytimes.com/2021/09/30/business/media/ozy-media-carlos-watson.html https://www.nytimes.com/2021/09/30/business/media/ozy-media-...
- wolverine876 5y ago
  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.
  - janmo 5y ago
    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.
  - filmgirlcw 5y ago
    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.
npunt 5y ago
Yeah that is a super fast turnaround. Guess it's easy when there's no there there.

ilamont 5y ago

It sounds like the COO may be charged with fraud. The "mental health" claim will not shield him. Or, the feds will try to flip him. Beware of charismatic CEOs spinning big tales.

dredmorbius 5y ago
"Going off the rails on a crazy train" would also be infringing on an earlier similarly-named media franchise. Tots derivative.
janmo 5y ago
I guess the CEO will be charged as well, he cannot deny that he did not knew.
paxys 5y ago
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.

paulpauper 5y ago

I wonder what the impersonation audio sounded like. was it robotic or obvious like Stephen Hawking's voice or something anyway, we're talking 1/100 the size of theranos, so could be worse

stickfigure 5y ago
83M? Isn't that 1/10 of Theranos?
- paulpauper 5y ago
  no, it was worth around 10 billion at peak
  - stickfigure 5y ago
    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.

Mizza 5y ago

I've got to say I've enjoyed watching this whole thing implode. They set out to be the "Uber of media", but ended up being the Theranos. I really hope we're starting to see the end of the "fake it till you make it" era.

dredmorbius 5y ago

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. https://en.wikipedia.org/wiki/OZY_(media_company) https://en.wikipedia.org/wiki/OZY_(media_company) I'll note that it didn't even rate mention on HN until the past week as well.

Mizza 5y ago
I've only been aware of it since the RS article where the writer went to OzyFest on acid with the Chapo bros: https://www.rollingstone.com/culture/culture-features/a-neoliberal-nightmare-at-ozy-fest-2018-702600/ https://www.rollingstone.com/culture/culture-features/a-neol... Nightmare fuel.
- dredmorbius 5y ago
  Even RS confuse the media scam with the rocker. See "In this story" on that article. Ozy != Ozzy
wolverine876 5y ago
> Wikipedia as usual has a decent overview IMO, it always reads decently, but I never know what is missing and what parts are accurate.
- dredmorbius 5y ago
  Offering a superior reference would be more substantive than making vague unsubstantiated assertions of innacuracy.

Apocryphon 5y ago

Nothing beside remains.

dredmorbius 5y ago
Bysshe!

deleted 5y ago

[deleted]

janmo 5y ago

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 that 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... Edit: this was the state of my knowledge back in 2017, I've googled what happened since. He had to step down from his functions, was convicted to pay a fine for running a company despite having being bared to do so. There is also a civil suit against him that has not been settled yet it seems. It does not look like that he was charged with fraud or anything else than running a company despite being bared to do so. It appears that he has started a new business in the Crypto space now. Note that this story happened in Germany and you don't go to jail easily here. His former startup went bankrupt but was acquired out of bankruptcy and found a new owner. He reduced the employee count from 100 to 20, scrapped all expansion plans to refocus on its core market and was able to make the company profitable in 2019.

andreilys 5y ago
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.
- janmo 5y ago
  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.
  - bellyfullofbac 5y ago
    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..

zthrowaway 5y ago

Breaking Points did a good segment on this: https://youtu.be/1pE9yqE5yMk https://youtu.be/1pE9yqE5yMk

Apocryphon 5y ago

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? Really looking forward to the Ozy documentary.

wolverine876 5y ago

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.

csilverman 5y ago

“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.

syndacks 5y ago
https://poets.org/poem/ozymandias https://poets.org/poem/ozymandias

malkia 5y ago

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...

jiscariot 5y ago

You have to give it to the NYT, they have amazing investigative coverage on any entity that threatens their profit model.

rchaud 5y ago

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.