Ozy Media CEO Carlos Watson joined CNBC’s morning show ahead of his company’s upcoming Ozy Fest in Central Park in July 2019 and, flashing a bright smile, shared an entertaining tidbit: Ozzy and Sharon Osborne were not only friends but investors in his media startup.
This was notable given that the Osbournes had sued his company over its similarly named festival. “We decided to be friends, and now they’re Ozy investors,” he said, beaming.
It appears that like many other claims made by Watson and the company, this wasn’t exactly true. Sharon Osbourne recently denied she was an investor, saying she didn’t think Watson’s company was worth anything. And she definitely wasn’t his friend. “This guy is the biggest shyster I have ever seen in my life,” she said. “He’s insane.”
This week, Watson clarified that the Osbournes were offered shares of Ozy Media as part of a lawsuit settlement they filed to protect the trademarked Ozzfest.
Over the past week, claims of deception and manipulation have roiled Ozy Media, throwing doubt on its reach, its mission, and its future. And Watson is at the center of this controversy.
Watson presented the image of the picture-perfect startup CEO: smart, charismatic, and well-connected. But now, many are left wondering how much of his story—and Ozy’s story—was really true. Current and former Ozy Media employees and contractors describe Watson as charismatic, but some paint a picture of a demanding CEO who was adept at evading questions. Watson did not respond to multiple requests for comment from Fortune.
“He was the master of maneuvering around questions and not giving an exact answer,” says a former employee, one of eight current and former employees and contractors who spoke with Fortune, most on the condition of anonymity because they feared retribution.
The public downfall of Ozy Media started when the New York Times reported that executive Samir Rao impersonated a YouTube executive during a conference call with Goldman Sachs, in which the firm was considering a $40 million investment. The article also called into question Ozy Media’s claims of reaching 50 million monthly unique users in 2019 and Watson’s comments to Axios of having more than 20 million subscribers to its newsletters.
The FBI is reportedly investigating the Goldman meeting for potential fraud violations; the agency will not confirm or deny that a case has been opened. Fund management company LifeLine Legacy Holdings filed a lawsuit on Monday against Ozy Media after investing $2 million in the startup in February 2020. The suit claims Ozy and cofounder Rao “engaged in fraudulent, deceptive, and illegal conduct.”
Watson called the New York Times report a “hit job” and said in a letter to employees on Sept. 27 that Ozy Media had 25 million newsletter subscribers, while the company’s social media reached 35 million users—30 million on YouTube alone.
And while Watson called Comscore’s audience calculations “deeply flawed” when it comes to assessing new media companies, the industry-trusted benchmarking service reports Ozy Media reached an audience of 2.5 million in 2018 and less than half a million users in July 2021. Comscore often does present lower audience numbers than companies’ internal analytics, but generally the discrepancies are not that large. Ozy has roughly 3,900 subscribers to its YouTube channel and less than 700,000 followers across Instagram and Twitter.
After his defense on Twitter, Watson publicly went quiet for a few days, but that didn’t stop further press scrutiny of Ozy’s marketing methods, website and newsletter traffic, workplace culture, and overall business practices. Following the onslaught of news, Ozy experienced a number of high-profile company departures, including Ozy investor and chair Marc Lasry, who resigned on Thursday, and star anchor Katty Kay. Investor SV Angel also announced it would give up its shares in the company.
The weeklong public turmoil proved too much for Ozy’s board of directors, which announced on Oct. 1 that the company was shutting down. Additionally, Ozy’s board hired a law firm to conduct an internal review of the startup’s business practices and put Rao on leave. Watson said Tuesday morning that Rao had been asked to step down. The internal investigation has been reportedly canceled.
The remaining employees, reportedly between 50 and 75 people, were given the news late Friday and told in an email Monday they’d receive their last paychecks on Oct. 8, including any PTO. Multiple employees told Fortune they lost all access to the company’s Slack, email, publishing platform, and Google accounts.
On Monday, however, Watson reemerged, saying Ozy Media would reopen. “We’re going to open for business…This is our Lazarus moment,” he told the Today show, adding that the ongoing negative reports were only a small part of the company’s overall strong performance.
“It was like open season for people to throw whatever crazy half-truth and put it out there,” Watson said on Monday of the past week’s reporting on the media startup. But even half-truths contain some truths—enough that both industry insiders and employees are now questioning Watson’s adherence to the core values of any good journalist: accuracy and veracity.
“Now that everything has come out, I don’t know what the fuck is true,” says former Ozy employee Joshua Eferighe, who started as an intern at Ozy in 2019 and was eventually promoted to staff writer before being discharged from the company in July after telling an executive he no longer believed in the product. “Everything could have been a fucking lie.”
Climb to the top
The son of schoolteachers, Watson, 52, often claimed his love of the news and media started with the passion his father, a Jamaican immigrant, had for radio and newspapers. “We would go to Miami Airport and he would tell me to run inside and buy him newspapers from around the world,” Watson said during a July interview.
“You know when someone’s eyes light up whether you bring them good food or you’re bringing them to their favorite basketball game or you’re bringing them to meet someone they like—that’s how his eyes would light up when you would bring him those newspapers,” Watson said.
Education was a big focus for Watson, who attended Harvard and graduated from Stanford Law in 1995. “It has almost acted like a passport,” he has said of his degrees. “It made people willing to engage in the conversation about my trying different things.”
He landed at McKinsey & Company for two years before launching Achieva, an online test and college prep service company. His cofounders included his sister, Carolyn, and former Merrill Lynch banker Jeff Livingston. (Kaplan acquired Achieva in 2002.)
At the same time Watson was building Achieva, he worked to start College Prep with Laurene Powell Jobs. The two met while volunteering as college advisers at a Bay Area high school.
The nonprofit, still in operation, works to help students from underserved communities graduate high school and college. Powell Jobs, a powerful force in the startup and nonprofit space, would go on to call Watson “a friend,” and the two would even cohost a Christmas party for several years.
While Powell Jobs would go on to become an investor in Ozy Media, she has said she thought Watson might run for office rather than go further down the media rabbit hole. “It’s a career that is well suited to his talents,” Powell Jobs said in an interview for a 2006 Stanford alumni magazine article. “He has a great policy mind, and he’s very charismatic. Honestly, I hope he does go into politics. We need people like him.” Powell Jobs’ Emerson Collective did not respond to a request for comment.
Instead, Watson landed a job as a host of a Labor Day interview special on CNBC in 2003, eventually hosting a show, The Edge With Carlos Watson, for the network. He later jumped to CNN, regularly appearing as a political commentator, before launching his own production company to develop the Conversations With Carlos Watson TV series and joining MSNBC as a daytime anchor in 2009.
In 2010, Watson left TV for a brief stint at Goldman Sachs. A spokesman for Goldman Sachs confirmed he was an employee for about a year and a half, in the role of managing director. But the spokesman could not confirm that Watson served as the global head of education investment banking—a title that’s cited in more than one of Watson’s bios: “We don’t formally track certain titles for smaller businesses like education, so we can’t confirm that [title] immediately.”
Inside Ozy Media
A year after leaving Goldman, Watson had a new focus. He launched Ozy in Mountain View, Calif., as an online magazine that focuses on news, arts, and culture. Inspired by Percy Bysshe Shelley’s sonnet “Ozymandias,” Watson said that Ozy Media would cater to the “change generation.”
Initially, the publication focused on finding “the new and the next,” as Watson referred to it, up-and-coming voices. (Ozy claims it discovered many now-prominent politicians and entertainers, but that’s been called into question.) Ozy Media eventually expanded into newsletters, TV shows, podcasts, and briefs. “Helping people be a little smarter a little sooner and doing it in a really flavorful way” was Ozy’s mission, Watson said in a 2020 interview with Variety.
Since its inception, the digital outlet found favor with Silicon Valley’s deep pockets, raising over $70 million from Axel Springer, Powell Jobs’ Emerson Collective, SuRo Capital, and former Ozy chair and billionaire venture capitalist Lasry.
Last year, amid the global pandemic that saw ad revenues slashed and the media events business tumble, Watson told Axios the company brought in $50 million in revenue and achieved profitability. Reportedly, the company boasted it would be valued at $5 billion by 2025.
In its latest second-quarter report, Ozy investor SuRo reported that its $10 million investment in 2017 now had a fair market value of $27.2 million in 2021.
In the workplace, Watson was “super accessible,” Eferighe tells Fortune, noting the executive was always walking the newsroom and telling employees to drop by with questions or concerns at any time. Watson put in work, Eferighe adds, saying the CEO was also a good interviewer and reporter. “We’ve got to call a spade a spade: The man is fucking talented,” he said.
Other former employees who spoke with Fortune describe Watson as obsessive with new projects and prone to setting unrealistic deadlines that necessitated long workdays and weekend shifts from employees. In some cases, that entailed 18-hour workdays, seven days a week, writing 12 to 14 articles a week, former employee Eugene Robinson wrote over the weekend.
“He comes across as a really charismatic guy, but he does lack a lot of empathy toward his employees,” said another staffer who spoke with Fortune on the condition of anonymity, fearing retribution.
Watson could also be very defensive, particularly when employees did ask questions, according to several.
Watson addressed some of the criticism of his management style and workplace culture in an interview with the Breakfast Club morning radio show on Tuesday: “I heard people said, ‘We work long hours.’ Yeah, you have to do that as a startup. I wish I could say that it was otherwise, but you do. People said, ‘You push too hard.’ I’m sure there were times where I have pushed too hard. I think there are people who said, ‘You bully.’ I’d say that’s definitely not true.”
“I think he believed so much in what he was doing that he got lost in it,” Eferighe said.
A few mistakes or a disturbing pattern?
Watson did admit on Monday that mistakes were made at Ozy Media, and he vowed to make substantial changes to the company’s approach to data, leadership, and culture, as well as marketing.
But some who have worked with or observed Watson still question his credibility. For instance, a former producer for the The Carlos Watson Show reported last week that Ozy falsely claimed the show would appear on A&E. It was only later, after guests were booked and some segments even taped, that the Ozy team said it would not be airing on A&E, but instead be a YouTube Original. The program ended up simply streaming on Ozy’s YouTube channel.
Watson explained Monday that the show was originally in talks to appear on the network, but that shifted to YouTube. Watson denied that it was ever touted as YouTube Original programming. “I hope that it was only a mix-up of words. I hope that’s all it was. It may not have been, but I hope there was only a mix-up of words,” Watson said of the situation. But how does a 17-year TV veteran not realize the difference between “selling” a TV show and merely posting a series online?
“I recognize mistakes can be made. I think the question is whether there’s a pattern and series of mistakes, and I think that is the larger issue,” Squawk Box anchor Andrew Ross Sorkin contended during Watson’s interview on Monday.
Ozy employees have many questions too. Watson sent an email to them Monday night, which some staffers shared with Fortune, saying Ozy will have its newsletters back online this week and plans to relaunch a TV show and a podcast season by the end of the year—despite knowing whether employees will want to rejoin. Watson also wants to have at least one Ozy Fest next year.
The employees Fortune spoke with were not eager to return.
“At this point, it’s kind of a joke,” one employee told Fortune. “I don’t know that more than two or three people have a ton of faith in the company.”
—Additional reporting by Jessica Mathews
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