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Goldman Sachs, Ozy Media and a $40M conference call gone wrong (nytimes.com)
254 points by jbegley 62 days ago | hide | past | favorite | 137 comments

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.

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?

> hard working, smart technologists struggle through and at best maybe make a decent living at a good tech company

Woah woah woah.

If we want to claim that any tech salary is hard working and struggling, then I suggest you spend a summer digging ditches for the DOT, coal mining, or working in a factory.

In the US, programmers make about 2.5x the median salary (2019) [0]. The entire US median in 2019 was $35,000.

So remember to look down for perspective too, not just up.

[0] https://www.ssa.gov/OACT/COLA/central.html https://money.usnews.com/careers/best-jobs/computer-programm...

If a teacher was telling you they’re exhausted from work would you smugly point out that ditch diggers have it harder? Physical labor and non-physical labor can both be demanding work, it’s not a competition and you’re not doing the physical laborer a favor by denigrating other people’s work.

Maybe you’ve been lucky enough to only have jobs with high pay, low stress, and good work life balance, but I’m sure you’ve seen enough tech burnout stories to know that tech jobs are not always easy. The factory worker and the engineer have vastly more in common with each other than they do with Elizabeth Holmes or Adam Neumann.

Implying that people can't be hard working because "look, there's this other job that seems like it's harder" is just... I don't even know what.

As for the struggling part, if you control for cost of living the picture is going to look a lot different.

Incidence rates (per 100 full-time worker equivalents) of nonfatal occupational injuries and illnesses by industry and case types, cases with days away from work, 2019 [0]

Fishing? 3.0 Bituminous coal underground mining? 3.0

Framing contractors? 4.5 Soft drink manufacturing? 4.8

Leather and hide tanning and finishing? 7.1

Computer systems design and related services? 0.1

Fatal injury rates fall along the same lines [1], and programmers commit suicide at less than 1/2 the rate of high risk occupations [2].

There's a difference between going home mentally exhausted, and being unable to go into work because your body is that injured.

Or to put it another way: if you were offered your equivalent salary, would you go fish Alaskan king crab or join a logging crew tomorrow?

[0] https://www.bls.gov/web/osh/summ1_00.htm (Table 1) https://www.bls.gov/iif/oshwc/osh/case/cd_r4_2019.htm (Table R4)

[1] https://www.bls.gov/iif/oshwc/cfoi/cftb0332.htm (Table A-5, Fatal incident counts by occupation) https://www.bls.gov/charts/census-of-fatal-occupational-inju... (Occupations with the highest rates)

[2] https://www.cdc.gov/mmwr/volumes/69/wr/pdfs/mm6903a1-H.pdf (Suicide Rates by Industry and Occupation, 2016)

I don't know that "hard-working" has generally been used to mean "working at hard physical labor". I have not been hard-working in that sense since the age of about twenty, the occasional home or volunteer project excepted.

Having said that, would you settle for "diligent"?

I struggle to find a term that allows for an equality between what I do on a daily basis, and what a fisherman does. Somehow, 'different but equal in effort' just doesn't seem accurate.

Which isn't to say that we aren't putting in work, or doing our best, or burning the candle, or creating amazing things.

You can do all of those things, and still not have as difficult a job as someone else. Because all work isn't the same.

And so I take a chunk of umbrage at whinging about the unfairness that we make so little while doing so much. "... struggle through and at best maybe make a decent living..." is a pretty damned entitled way to see the world.

Difficulty of a job is probably viewed differently from person to person also. I've done both programming and commercial fishing and I'd say they take different types of effort. Depending on the fishery, you could have a few months with lots of intense physical work and not much sleep, but the plus side is you get to work out on the ocean in a beautiful environment and you can travel around and not work for the rest of the year. One tech job I had, I was on call 24/7 with hours of commuting each day and it was very stressful and mentally tiring in my experience.

Hard-working (i.e. working hard) does not exclusively mean "working at hard physical labor". You are not insane.

It is a logical fallacy known as Relative Privation: https://academy4sc.org/video/fallacy-of-relative-privation-a...

By this token most of the tertiary sector can't be hard working and struggling, which would be more than 2/3 of the workers.

We'd also have to exclude all the workers that aren't in abusive conditions, like self owned artisan shops, plumbers etc. And exclude gig economy workers who don't literally work themselves to death and only work "a lot" for little pay.

You might be right, but the slice left is so small I am not sure it's a useful distinction in most conversations. Perhaps qualifying ditch digging and coal mining as "extreme working" and "hardcore struggling" would be a better fit.

I think ethbr0 was kind of dividing it into 3 categories:

People with it easy: 2.5x median and working in an office, which includes programmers

People with it hard: making little and doing backbreaking labor

People with it medium: everyone else

So we shouldn't say people in the easy category are struggling, and for perspective we should think about people in the hard category. But we can't say one way or the other about people in the medium category.

To quantify it, I guess it's the ratio of (physical or mental discomfort) to (compensation) that I'm talking about.

I wouldn't say programmers have exceptionally high mental discomfort; we certainly don't have high physical discomfort. And we're well compensated, relatively speaking.

In contrast, we have oil field workers(?): uncomfortable physical and mental work, but well compensated. Or meat processors: uncomfortable physical and mental work, poorly compensated.

By that metric, it seems like we're doing pretty well.

That may hold true for US (and even then there's a lot of variation in living expenses and affording things like education or healthcare), but it doesn't necessarily for many of the other countries out there. For example, i recently did a blog post on my earnings as a software dev in Latvia: https://blog.kronis.dev/articles/on-finances-and-savings

In short:

  - i earn 1.5x the average salary/wage in my country
  - that figure is approximately 1500 euros per month
To afford the cheapest VW Golf [0] (a popular car here), i'd need to save up 22'325 euros, which is the equivalent of 15 months' wages, or ~30 months with the ability to save 50% of what i make. It'd take me over 2 years to afford a new car, which is also why the used car market is so popular here.

To afford a house in my region of the country [1], i'd need to save up around 100'000 euros, which is the equivalent of 67 months' wages, or ~134 months with the ability to save 50% of what i make. It'd take me over 11 years to afford my own house, something for which i really don't have an answer - most people just rent apartments instead (also we're talking about countryside properties here, not the ones in cities).

Of course, it's not all bad, but how much money people in various careers make and how much PPP holds true in a globalized economy varies greatly, as expressed in that blog post of mine. Some countries are just poor and the people in them aren't well paid. Some companies are profitable but aren't incentivized to pay developers anything above what they can get away with - which is also why many of the WITCH companies have regional offices in my country, as we're one destination for outsourcing. As for how hard these careers are, it depends: some people are miserable working in software, but at the same time at least it isn't back breaking work.


[0] https://www.volkswagen.lv/lv/models/golf-8.html

[1] https://www.ss.lv/lv/real-estate/homes-summer-residences/lim...

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.

I lump them together because their primary skills are charm and persuasion rather than hands-on subject matter expertise. To me, it doesn't matter whether the end result turns out to be fraud or incompetence, they get ahead of honesty and competence by being phony smooth-talking salesmen. Like a role playing character that puts all their skill points into "Charisma" and nothing else.

And it's not just high profile entrepreneurs. Everyone knows people like this, they're all around us, climbing the corporate ladder. Mediocre performers, but boy can they "look the part", flash a big gorgeous smile, and talk in ways that sound pleasing to leadership but are ultimately empty words.

> Mediocre performers, but boy can they "look the part", flash a big gorgeous smile, and talk in ways that sound pleasing to leadership but are ultimately empty words.

Coincidentally, this also characterizes Ozy's content, which is unbelievably vapid and safe, but delivered with an unearned tone of gravitas. At least TED(x) talks were sometimes good because of the sheer number of them. Ozy content is never good.

Right! And go ahead and try to unsubscribe! Impossible.

Obligatory question: why don’t you do that if it’s so easy? My suspicion is you judge a book by its cover, how do you know it’s not just how they treat others ie. with a big smile that makes them succeed, but also the effort they put in behind the scenes when you’re not looking?

Does putting up a great face necessarily mean the content must be garbage and the whole package cannot be just as great?

I don't think anyone is saying it's easy - the complaint seems to more be that it creates no value (unlike those hard working technologists).

It's not easy, though it's mostly learnable. But the important part is that it's also a moral failure. You have to sacrifice your soul to do this well.

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.

Adam Neumann is not Elizabeth Holmes, but there is more to his story than "a failed IPO that included some hyperbole".

Did you miss the part where he trademarked company property and tried to sell it back to the company? Or the part that he acquired buildings and leased them to WeWork at inflated prices? There's an argument her for Adam Neumann to be actually WORSE than Elizabeth Holmes.

Neumann was a complete conman, and he's the smarter one because he got away with a lot of money , while Holmes is a psychopath who hopefully will end up with a long prison sentence.

I'm so jaded that I think she will get off scott free

Of course! She will serve no prison time, and for the rest of her life remain richer than any of us are here on HN. Furthermore, she will go on to found other companies and have no trouble funding them. I could even see a successful political future with her prestigious contacts in government. Easiest predictions I’ve ever made.

Nah, she made a lot of proud people look stupid. I predict she'll get the Shkreli treatment.

Not now, she's already blaming that little guy who followed her around like a puppy dog. That whole "woke" thing will work to her advantage.

I predict a no federal jail, or a few months, like a Martha Stewart. She will write her bio.

She will be on the talk circuit the minute the trial is over, and talk about being a victim.

I don't think she will wear the black turtleneck ever.

My wish is they start to fining white collar criminals much more, especially the wealthy ones. Federal prison time for wealthy criminals seems like a vacation. Get them where they worship---their money. Every time I hear the fine, I cringe. Is that all? I would like to see all societal fees/fines tied to assets. She shouldn't feel able to capitalize on the crime either.

Then again I have never understood the logic of making a poor man pay the same fine, as the poor man.

>That whole "woke" thing will work to her advantage.

I wouldn't be so sure. That whole "woke" thing is turning on white women and gay men rather quickly. Granted it's mostly middle-aged white women up to now, but Elizabeth Holmes has become a symbol of some excesses that are unpopular all over.

> Holmes is a psychopath who hopefully will end up with a long prison sentence.

This is an incredibly vile thing to wish upon anyone.

I hope you take some time to reflect what a long prison sentence actually implies in the US and consider whether or not that’s actually an appropriate punishment for what only amounts to a financial crime.

Theranos was rife with bullying and threats, and it affected lives of patients because of the false tests. Messing around with tests is not a joke, lives are at sake.

There were a few things in the WeWork story that were way closer to the fraud line than you're implying here including circular revenue and self-dealing.

It takes a while for fraud to come to light. I'm not for a second suggesting Neumann is a fraud, but I would guess that the people who conflate him with Holmes think (rightly or wrongly) that the WeWork saga had at least some high-level hallmarks of fraud.

Note that according to the story, the fake email address was provided by the CEO, which was then used to arrange a call between Goldman and the COO/cofounder, pretending to be a YouTube exec.

At first glance, that seems to implicate both the CEO and the COO/cofounder in the fraud. Even if you buy the story that the COO was experiencing a mental break, I wonder what the CEO's excuse was? Must be pretty good, since his board apparently was fine with it...somehow.

(One rather suspects the FBI and the SEC will be less impressed.)

Of course the CEO is in on it. He probably set it up in the first place. How did he not recognize his own COO on the call?! Even with the voice "digitally altered" (?) it should be trivial to recognize someone you work with every single day. And if the CEO had been in contact with the YouTube person before he also, at least, should have understood that this was not him.

If you search for the CEO's name on Google Images, you get a wall of photos with the exact same broad, fake smile. What a character. It's amazing what some people can get away with.

Both the CEO and CFO had to have been involved. This is simply criminal fraud and hopefully both individuals are prosecuted for it.

My guess is the board is made up of investors who don't want to see their money disappear when the leadership gets criminal convictions. That is why they brushed it under the rug.

Ozy, their investors/backers and surprisingly Goldman themselves all seemed to have gotten over the incident a little too casually. Google was the one who raised up a storm and got the FBI involved, despite not even really being part of the whole situation.

Not part? Wasn't it one of their execs who was impersonated?

And the hypocrisy of companies to make employees read & sign "code-of-conduct and ethics" and shitty training sessions on integrity and values.

If execs and top leadership simply walked the talk it will do far greater good.

> 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.

If someone is robbing Peter to pay Paul, Paul doesn't have much motivation to stop the robbery.

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/impost...

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.

Absolutely! It's a humorous take but still presents an excellent way to frame the situation through the lens of perverse incentives of board members of a private company in a smoke-and-mirrors industry such as media.

> I struggle to understand how these board members think they’re fulfilling their duties.

A help into their accounts might help here.

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."

> 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.



> 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.

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.

Wait until you learn about San Francisco

My batting average is 1.000, if I can claim every strikeout was a temporary mental health anomaly.

San Francisco and I have a history of disagreement. :)

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.

Right on. As a friend of mine said, he hasn't been fired because he has all the receipts.

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.

> 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.

How is this immaterial? The two co-founders tried to defraud an investor.

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.

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.

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.

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.

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.

Hint: Goldman's definition of "this space" is much more about the "who" than the "what"

That’s answered in the article.

They 'walked away' and then the deal got done 2 months later - there are no details on who did the deal.

"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..

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

This is what made me angry about this story the most. "Mental health episode" is quickly becoming a universal excuse anybody can use for anything for mild discomfort to downright criminal behavior. Elizabeth Holmes is going down the same path in her defense. Woke is good for business, let's see if good enough to stay out of jail. For Samir Rao, it probably is.

Holy shit they have multiple videos with zero views and tons more with less than 10 or less than 100 views.

For a company that claims to have 25 million newsletter subscribers?

So, I don't want to say they're completely on the up-and-up, but you _are_ looking at the corporate YouTube channel.

Their "Carlos Watson Show" channel looks a lot more legit (though nowhere near the numbers they're claiming): https://www.youtube.com/channel/UCyF0994XbriKL_Vss0fTUMw

and they also produce podcasts, news articles, and newsletters that presumably have some subscribers: https://www.ozy.com/pg/podcast/ https://www.ozy.com/pg/news-and-politics/ https://www.ozy.com/newsletters/

Are we looking at the same Carlos Watson show? Looking at their most recent upload, it has 363 views in 3 days, and that's actually above average.

Well, ‘a lot’ is relative… But yes, I agree with you.

> Their "Carlos Watson Show" channel looks a lot more legit

Best part of 100k subscribers - and views for the videos 1 week ago: 223, 223000, 249, 188, 82, 232, 570, 123, 14000, 102.

I guess they forgot to buy followers for the Carlos Watson Show instagram account, 1,075 followers. Although it does get about as many likes and comments as the posts on the 'corporate' Instagram account with its 655k followers.

They're just vapid and corporate, and vapid and corporate means a lot of warmed over cultural studies buzzwords. Raising capital based on wokeness is a no-lose situation (ask Theranos.) As an investor, you can count your investment as pseudo-charity work in your press releases and reports.

It has to be some kind of money laundering scam, or other fraud, right?

Surely, no matter how out of touch they are, these old investors understand that not a single teen and college studens actually watches Ted Talks every day, reads Vox, listens to the NYT Daily on their way to classes, and has the Open Society Foundations RSS feed on their phone, right? They understand no one actually gives a F** about "media companies that challenge the status quo, shake things up, and go deep on the issues that matter most". Come on! The most "media" they watch is Linus Media Group, the Daily Show, and John Oliver. Only slightly exaggerating. It's impossible for them to be this out of touch!

Is there any data to back this up? IIRC, the NYT is performing very well in the 20-something demographic.

Also, IME generally people start reading more seriously, such as the NY Times, etc., when they're older; we need data on how such a media company performs in markets relative to some standard for realistic expectations. I'm sure the NY Times has few readers among high schoolers, but that doesn't indicate future problems

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?

The president of the Ford Foundation might attend the same cocktail parties as the investment leadership at the US's large banks, but you can rest easy knowing that (1) both are still very cool with fossil fuels, and (2) only the latter is investing any meaningful amount of capital.

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=waZlYPzMJ28

- https://www.youtube.com/watch?v=YWg6kF-y6d4

It's not necessarily bots. They could just be buying views with ads.

Their COO pretended to work for YouTube. After something like that, you lose the benefit of the doubt.

I'm surprised YouTube doesn't crack down on this. On the other hand, they might have just asked for a closer inspection.

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.

YouTube doesn't crack down on anything unless they positively, absolutely have to in order to avoid a full-scale scandal.

> “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.

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.

Wasn't it great how Sunny stood by Elizabeth Holmes while they stood to make money by lying?


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."

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 [...]"


"[...] 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.

When working at Scottrade, I got yelled at for downloading the source code to `touch`. (https://github.com/coreutils/coreutils/blob/master/src/touch...)

Apparently it was a security violation, and I was warned never to do something so dangerous again.

It's painfully hilarious to me how many glaring security holes are all throughout companies, but they will have the most asinine and pointless rules.

They pretend to follow PCI[1] in a few ways while breaking it in orders of magnitude more ways. Explaining this to them is a nightmare.

I've seen so many post-its with login/pw just everywhere, unlocked machines, hints that were the password, one-word obvious dictionary passwords- but if you bring in a personal cell phone/book that's a serious and terminable offense!

Side-note: the worst offenders kf post-its woth sensitive info are people with offices, like someone doesn't clean their offices every night (see further down).

I once proved a point I could easily remember a complete CC# with all PII, walk out and write it down in the bathroom, yet still have rules saying you cant even bring so much as a book in with you. Which makes sense for following laws but not when you let random people walk in (HR, random favorite employees, whatever) with them even straight up notepads and pens.

Someone could also easily walk in with a voice recorder on and just record all day and go home. So the rules did nothing practically, was probably more of a way to get rid of undesirables.

All while the company is recording with ceiling-mounted cameras which went against their contracts (was to be visual only per compliance but wasn't), with public-facing IP without even a password(for the sole reason of wanting to make it easier to view the feeds from their cellphone), and hosted on a windows PC with Norton 360(PCI compliance after all!).

Once someone high enough up is making stupid decisions they are defended mindlessly and to the death. Pointing out the reasoning behind the decisions and ways to reach those goals without just pretending to will always fall on deaf ears.

Also many businesses seem to purposefully turn a blind eye to this[2], they do only enough KYC to CYA, etc.

I've seen businesses follow PCI and recommended FTC best practices only to contract out their janitorial services, who then subcontracted to someone else.

[1] https://www.pcisecuritystandards.org/pci_security/maintainin...

[2] https://www.ftc.gov/tips-advice/business-center/guidance/sta...

edited to add stuff

My takeaway is that the facility director clearly has nothing useful to do if they’re having meetings over a shoeless person at 6pm, and probably should’ve been let go.

Most higher-ups in academia don't do much. But ssh, don't tell anybody ;).

I appreciate that you have a sense of humor and positive attitude about this, but I do not. It pisses me off, and people in positions of high responsibility should reap the downside of high accountability.

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.

This type of management, but taken to the extreme. https://www.theverge.com/2021/4/23/22399721/uk-post-office-s... People need to stop jumping to negative conclusions.

Similar situation: cashier at work (now my wife) gives me cash back when I buy something; turns out two new $20s got stuck together. I didn't notice until later that night. I texted her to tell her she may have given me an extra $20 and if her drawer is short, I'll bring it back. Well she doesn't text me and gets written up for being $20 short. I bring the $20 the next day and explain the situation. The closing manager writes her up for being $20 over.

I thought this sort of arrangement was pretty common for cashiers? If punishment weren't draconian business would cease. People I've known who've worked in retail and didn't seem to care at all about shoplifting have been very attentive to the receipts matching the till.

Of course this arrangement seems unfair; this may be a good argument for going cashless.

It's a bit early to say nothing will come of this. Google certainly has deep pockets and an incentive to push for prosecution, and indeed they have alerted the FBI.

If anyone sues, I would think it would be Goldman as they were the firm they attempted to defraud here, and they must know how to prosecute fraud like this very well.

But, if they are holding a lot of equity in this company, they are also incentivized to brush it under the rug until they can offload their position. It wasn't clear to me if they had invested yet and were looking to invest more, or if they have no stake yet.

If they don't have a stake they probably just won't take one after this due diligence revealed even more than they bargained about the company.

Goldman doesn't have much of an interest here; they'll surely keep their money away from this company, but without the deal going through, their damages are minimal (in fact, it might even saved them by showing how bad of an investment this would've been for them).

Google, on the other hand, had one of their higher-ups impersonated to lie about platform statistics. I don't think they'll let this slide, if only to prevent other people from doing the same.

> If anyone sues, I would think it would be Goldman as they were the firm they attempted to defraud here, and they must know how to prosecute fraud like this very well

The Board not only brushed off brazen fraud by the co-founders, its members went to the press to defend them. Minority investors, including employees with share awards, would have a case for damages.

> Fast forward to today and (quoting the great Mark [sic] Levine)

A better (more apt) Matt Levine quote might've been about the recent story of a Softbank exec taking his shoes off and resting his feet on the lap of some speechless Fifa exec on a private plane.

(I think it was repeated the next day or so in column on Monzo founder's similar anecdote about the same exec's toenail-picking, if you want to find it.)

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.

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.

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

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.

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.


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?

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.”

> 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.

Reading that story, I wonder where hustle culture went wrong. Paul Graham famously celebrated "breaking the rules" (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.

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.

PG is no saint. It's people like him who go around preaching borderline fraud in the name of so called hustle.

> 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.

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.

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.

Incidentally, guess what made today's Money Stuff newsletter?


>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.

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.

> 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.

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

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

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

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'


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.

  "Nothing beside remains. Round the decay
  Of that colossal wreck, boundless and bare
  The lone and level sands stretch far away."

Back in 2016, somebody came up with "Hillymandias", suitably adapted to her situation. But it seems to have disappeared entirely from the internet.

For more poetry see the end of the WaPo link above.

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

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?

Whoa. Good hustle!

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