Ozy Media, a digital media company whose co-founder impersonated a YouTube executive in an effort to raise $40m from Goldman Sachs, said it was closing, bringing the curtain down on a venture that had promised to shake up the news and entertainment business.
The decision announced on Friday night comes five days after The New York Times reported details of the impersonation incident and raised questions about Ozy Media’s business model and the size of its audience.
“At Ozy, we have been blessed with a remarkable team of dedicated staff. Many of them are world-class journalists and experienced professionals to whom we owe tremendous gratitude and who are wonderful colleagues,” the company’s board said in a statement.
“It is therefore with the heaviest of hearts that we must announce today that we are closing Ozy’s doors,” it added.
Ozy admitted to the impersonation incident, attributing it to a “mental health episode” experienced by cofounder Samir Rao. The New York Times also questioned Ozy’s claim in 2019 that it reached 50m unique users a month and compared that to data from ComScore, which measures online engagement, showing figures at a fraction of that level.
Carlos Watson, chief executive, co-founder and the public face of Ozy Media, had disputed the NYT report, claiming it was inaccurate. In a memo to Ozy Media staff this week, Watson said the metrics used by the New York Times were outdated and failed to capture his company’s audience across multiple platforms.
However, despite Watson’s attempt to defend Ozy Media, which had attracted a star-filled roster of board members and media contributors over the years, several top employees departed following the New York Times revelations.
Former BBC journalist Katty Kay resigned amid the allegations, which she called “serious and troubling”.
Hedge fund manager and Milwaukee Bucks co-owner Marc Lasry stepped down from the board after just three weeks as chair, though he said he remained an investor in the company on Thursday.
Ozy pitched itself in 2013 as one of a budding group of digital media companies, such as Vice and BuzzFeed, which at the time attracted billions of dollars from investors for their clout with young people.
The company, named after Shelley’s poem “Ozymandias”, drew early funds from Axel Springer in 2014, valuing the group at $120m. In total the company has raised more than $80m in venture funding since its founding, according to PitchBook data.
Earlier Friday, before Ozy announced its closure, Axel Springer said it had not held a board seat since 2019 but that one company executive, Jens Müffelmann, attended meetings in an observational capacity.
“In light of current developments and accusations against Ozy, [Müffelmann] has decided and informed the CEO of Ozy yesterday that he [is stepping] down from this function”, the company said.
Another early investor, Laurene Powell Jobs’ organisation, the Emerson Collective, similarly sought to distance itself from the company this week. “Emerson did not participate in Ozy’s latest investment round and has not served on its board since 2019”, the company said.
Additional reporting by Alistair Gray in London and Miles Kruppa in San Francisco