📉 Ozy Media’s collapse


October 4, 2021

The Hustle

Damn, we screwed up… again. Yesterday’s fantastic Sunday story — on the quickie-wedding capital of the world (Las Vegas) — was written by the talented Zoë Bernard, not one of our staff writers. Help us make it up to Zoë by reading the piece.

Today’s rundown:

  • Ozy Media’s collapse: The story of how a media startup with $70m+ in funding imploded over 5 days.
  • Pea prices: Soy milk. Almond milk. Now, pea milk? Yep.
  • Digits: Beehive fences, squid imports, toilet paper, and more wild numbers.

Let’s do it.

The Big Lead
Ozy Media gif

The Ozy Media collapse, explained

A week ago, The New York Time’s Ben Smith published a shocking story: The COO of Ozy Media impersonated a YouTube executive in an effort to secure a $40m investment from Goldman Sachs.

Absurdly, the Ozy exec’s deception included the use of a voice modulator app. Goldman eventually reached out to YouTube and — when the parties uncovered the potential securities fraud — they contacted the FBI.

Ozy framed the episode as a “mental health issue” but the blowback from the report was immediate. On Friday, Ozy Media shut down.

How did it happen so fast?

Axios’ Sara Fischer says the company was built on “years of lies” pushed by its CEO Carlos Watson and COO Samir Rao. To close advertising deals and attract talent, Ozy faked audience numbers:

  • 95%+ of the traffic to Ozy’s flagship YouTube show (“The Carlos Watson Show”) was paid
  • A 20m+ email list was created by “dubious” marketing means, and reader requests to unsubscribe were ignored
  • Attendee numbers for its live event (Ozy Fest) were grossly inflated
  • The following on its social channels (i.e., Twitter, Instagram) were almost all paid for and showed very little engagement

Ozy Media was founded in 2013 to great fanfare

Helmed by Watson — a Black American entrepreneur with Harvard, Stanford, MSNBC, and Goldman Sachs on his CV — the media venture has raised $70m+.

Its backers included heavyweights like Laurene Powell Jobs (Steve Jobs’ widow), Ron Conway (VC legend), and German publishing giant Axel Springer.

Pitched as a destination for undercovered news stories, Ozy eventually became a vehicle to raise the profile of Watson, with millions in marketing dollars put behind his YouTube show.

The ‘cult’ of Carlos…

… is how a former employee explained the toxic work environment to CNN.

In addition to fake traffic figures, management lied about lucrative TV deals with the likes of Amazon and A&E. The house of cards collapsed after the NYT story:

  • Ozy’s chairman stepped down
  • Katty Kay — a star journalist who joined Ozy from the BBC — resigned
  • Conway’s fund (SV Angel) gave back its shares in the company, which is almost unheard of in the VC world

Watson himself pulled out of hosting duties for an Emmy’s awards program and left the board of NPR. Now, he will unwind the company, leaving its 75 full-time employees in search of new jobs.

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SNIPPETS

Luxury hack: Neiman Marcus warned customers of a data breach that could impact 4.6m people. #ecommerce-retail

Gone electric: Rolls-Royce announced its 1st EV and plans to go fully electric by 2030. #clean-energy

Human-tech: Intel launched computer chips to expand its neuromorphic computing system, which is technology that mimics the human nervous system. #emerging-tech

Apply Pay problems: Researchers found a bug in Apple Pay that lets people make contactless payments with Visa on locked phones. #privacy

NFT gaming platform Axie Infinity saw the value of its coin (AXS) hit $30B. #fintech-cryptocurrency

Contact compatibility: Facebook released cross-app group chats between Instagram and Messenger. #big-tech

Pea Prices
Ripple beverages

Easy peasy (Source: Ripple Foods)

Peas are a hot plant protein, but they may soon cost more

Peas are a buzzy alternative protein, but one supplier says bad weather may cause a price hike ultimately shouldered by consumers.

Roquette Freres is a French vegetable processing company that supplies, among other things, pea protein. It says bad weather and low yields in Europe, combined with a drought in Canada, have:

  • Reduced the pea supply by 45%
  • Caused prices to increase 120% from last year

Roquette thinks the “dramatic increase in prices will inevitably lead to costs being transferred to customers.”

At the same time, the demand for plant-based and alternative proteins has increased. A recent study suggests alternative proteins could account for 11% of the global protein market by 2035, compared to 2% in 2020.

Milk is one of the most popular uses for pea protein

Its market value was $122.9m globally in 2019, and it’s expected to reach $251.2m by 2027, per Allied Market Research.

Meanwhile, Ripple Foods, a frontrunner in the pea-based dairy industry, just raised $60m in Series E to expand, per Bloomberg.

What exactly is pea milk anyhow?

You don’t get pea milk by mashing a bunch of peas.

As journalist Larissa Zimberoff explains in her book, Technically Food, the peas are first shipped to a manufacturing plant — often in China.

There, the molecules are split into protein, fiber, and starch. So what pea milk is actually made from is a pea protein isolate powder.

You’ll probably be really popular at parties if you share that factoid.

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Free Resource

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By The Numbers
Burlington

Digits: Beehive fences, squid imports, toilet paper, and more.

1) The Burlington Coat Factory made a good decision renaming itself to Burlington Stores in 2009, given just 5% of its $5.8B in 2020 revenue was from coats.

2) A new study of 50k monuments in the US found there are 22 statues of mermaids and just 2 of congresswomen. Also interesting: Polish revolutionary war officer Casimir Pulaski bested Thomas Jefferson 51-36 in memorial count.

3) Across Africa and Asia, farmers have deployed~10k beehive fences at a cost of $1.2k per acre to keep elephants from eating crops. It’s incredibly effective, with 61% of farmers saying it’s better than other measures (no duh).

4) Consider Squidward impressed. Or scared? The US imported $314m of squid in 2019, with ~50% of it coming from China, much of it likely caught illegally.

5) One thing that unites Americans: our love of toilet paper. Globally, it’s a $26B industry, and the average American uses ~140 rolls each year. If only everyone started using the enormous Forever Roll, meant to last a month.

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AROUND THE WEB

🛰️ On this day: In 1957, Soviet satellite Sputnik launched from the Baikonur Cosmodrome in Kazakhstan, triggering the space race.

🚂 Wow: Miniatur Wunderland in Hamburg, Germany, is the largest model railway in the world at 16k+ sq. ft. It contains 1k+ trains, 9k+ cars, and 52 planes. To see it in action without leaving home, check out this 20th anniversary video.

🎵 That’s cool: Many of Spotify’s songs get little to no play at all. Forgotify finds those tracks for your listening exploration.

🎨 Art: California-based artist Esther Pearl Watson has painted one scene every day of the pandemic, juxtaposing day-to-day activities against a changing world.

🤝 How to: Sure, there are a lot of articles about how to get along with your co-workers. But these tips on building rapport come from a former CIA analyst.

🦕 That’s interesting: Scientists on the British Isle of Wight recently discovered the remains of a 30-foot-long dinosaur they’ve nicknamed “the hell heron.”

Meme of the day
meme

Source: Pinterest

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