NEW YORK — Former talk show host Carlos Watson was sentenced Monday to nearly 10 years in prison in a federal financial conspiracy case that cast his once-buzzy Ozy Media as an extreme of fake-it-’til-you-make-it startup culture.
So extreme that another Ozy executive impersonated a YouTube executive to hype Ozy to investment bankers — while Watson coached him, prosecutors said.
Watson, 55, and the now-defunct company were found guilty last summer of charges including wire fraud conspiracy. He has denied the allegations.
Watson, who has been free on $3 million bond, faced a mandatory minimum sentence of two years in prison and potentially as much as 37 years.
Prosecutors accused the former cable news commentator and host of playing a leading role in a scheme to deceive Ozy investors and lenders by inflating revenue numbers, touting deals and offers that were nonexistent or not finalized, and flashing other false indications of Ozy’s success.
Watson even listened in and texted talking points while his co-founder posed as a YouTube executive to praise Ozy on a phone call with potential investors, prosecutors said.
“The quantum of dishonesty in this case is exceptional,” U.S. District Judge Eric Komitee said, later telling Watson: “Your internal apparatus for separating truth from fiction became badly miscalibrated.”
Watson blamed any misrepresentations on others, and he said he was a target of “selective prosecution” as a Black entrepreneur in Silicon Valley, where African American executives have been disproportionately few.
“I loved what we built with Ozy,” he said in court Monday, initially addressing supporters in the audience before the judge suggested he turn around. He portrayed himself as a founder who put everything he had into his company, saying that he took an average salary around $51,000 from Ozy in its final years, has triple-mortgaged his home and drives a 15-year-old car.
The co-founder, Samir Rao, and former Ozy chief of staff Suzee Han pleaded guilty and are awaiting sentencing. Both testified against Watson.
Ozy, founded in 2012, was styled as a hub of news and culture for millennials with a global outlook.
Watson boasted an impressive resume: degrees from Harvard University and Stanford Law School, a stint on Wall Street, on-air gigs at CNN and MSNBC, and entrepreneurial chops. Ozy Media was his second startup, coming a decade after he sold a test-prep company that he had founded while in his 20s.
Mountain View, California-based Ozy produced TV shows, newsletters, podcasts, and a music-and-ideas festival. Watson hosted several of the TV programs, including the Emmy-winning “Black Women OWN the Conversation,” which appeared on the Oprah Winfrey Network.
Ozy snagged big advertisers, clients and grants. But beneath the outward signs of success was an overextended company that struggled — and dissembled — to stay afloat after 2017, according to insiders’ testimony.
The company strained to make payroll, ran late on rent and took out pricey cash advances to pay bills, former finance vice president Janeen Poutre told jurors. Meanwhile, Ozy gave prospective investors much bigger revenue numbers than those it reported to accountants, according to testimony and documents.
On the witness stand in July, Watson said the company’s cash squeezes were just a startup norm and its investors knew they were getting unaudited numbers that could change.
Ozy disintegrated in 2021, after a New York Times column disclosed the phone-call impersonation gambit and raised questions about the true size of the startup’s audience.
Images courtesy of FitBiomics: their two products, Nella and V•Nella
FitBiomics
Want to know a wild secret? Those superhuman athletes who run hundreds of miles or train like machines might have something special in their gut. Actual bacteria that help them power through when the rest of us would be face-down on the couch. Here’s the cool part: a bunch of smart folks figured out how to bottle that special sauce. They discovered these tiny powerhouse organisms living in ultra-marathoners’ digestive systems and turned them into a simple probiotic pill. One of these bacteria is particularly neat – it literally eats up the stuff that makes your muscles burn during exercise.
The best part? You don’t have to run 100 miles or train like an Olympian to benefit from it. People taking these probiotics are reporting they don’t need their extra afternoon naps anymore, and some are even ditching their mid-day coffee runs. Plus, they’ve got another version that helps with sleep, because apparently these elite athletes are good at that too.
Enter FitBiomics, led by former college basketball player turned Harvard scientist Dr. Jonathan Scheiman, which is flipping the traditional medical research model on its head by focusing on health rather than disease. The company has raised $6 million to date in order to bring their clinically validated probiotic innovations to the world.
“Traditional biotech really takes 10 years and billions of dollars to develop drugs with less than a 10% success rate,” explains Scheiman, who completed his postdoctoral research in George Church’s lab at Harvard. “Think about where we are in terms of society – we’ve probably been sicker than ever. 60% of all US adults have at least one chronic disease, costing the government up to $4 trillion a year in preventable healthcare costs.”
From Basketball Court to Biotech Lab
Scheiman’s journey to biotech entrepreneurship wasn’t conventional. “In another life, I played basketball in college, wanted to be a pro ball player, didn’t make the NBA, so as a backup, I got a PhD in biomedicine,” he shares with a hint of humor. This unique background – combining athletic experience with scientific expertise – would prove invaluable in shaping FitBiomics’ innovative approach.
FitBiomics team: DR. JONATHAN SCHEIMAN, PHD and DR. GEORGE CHURCH, PHD
Images courtesy of FitBiomics
Rather than studying disease, FitBiomics examines what makes the world’s top athletes exceptional. Their groundbreaking research, published in Nature Medicine, led to the discovery of Veillonella, beneficial bacteria that metabolizes lactic acid to power our muscles’ mitochondria. “We looked at ultra-marathon runners that run 100 miles at a time, and we found this microorganism called Veillonella that naturally eats lactic acid to fight fatigue and promote endurance,” Scheiman explains.
The Wellness Revolution: Consumers Don’t Want to Become Patients – They Want to Stay Consumers
The wellness economy is projected to reach $7 trillion by the end of the decade, reflecting consumers’ growing interest in preventative health solutions. Within this space, the global probiotics market alone is expected to hit $100 billion. FitBiomics is positioning itself at the intersection of these trends, with some impressive early results – they’re reporting over 80% month-over-month customer retention rates.
“Consumers don’t want to become patients. They want to stay consumers,” Scheiman emphasizes, highlighting a key shift in how people approach their health. “Everyone now is really more interested in health span. How can they optimize their biology without relying on pharmaceutical interventions?”
This shift in consumer behavior is particularly notable in the context of recent health trends. “I think GLP-1 has kind of changed everything,” Scheiman notes, referring to the popular class of weight loss drugs. “People are using it not just to treat obesity, but almost now as like this biohacking aesthetic kind of thing. And the crazy thing about it is people are spending thousands of dollars a month for it.”
From Lab to Market: A New, Agile and Cost Effective Approach to Product Development
The company has already commercialized two products. Their flagship offering, V•Nella, helps metabolize lactic acid and reduce fatigue, while Nella targets sleep health – a crucial market considering that 100 million Americans suffer from insomnia.
“Within 10 to 14 days of daily consumption, consumers feel the difference,” Scheiman notes. “They have less daily fatigue interfering with their daily life, more energy, and some people are tracking cardiovascular benefits on their wearables. We hear really cool anecdotal feedback like, ‘Hey, I no longer have to take a nap in the middle of the day, or I no longer need coffee in the middle of the day.’”
The Science Behind the Success
FitBiomics’ approach represents a significant departure from traditional pharmaceutical development. “We’ve decoded the 0.01% of the population, in terms of human performance. This is a very unique biological phenotype where we can now identify the drivers of optimal physiology,” Scheiman explains.
The company’s focus on elite athletes’ microbiomes has yielded surprising insights. “Think about organ transplants, blood transplants, stem cell transplants from healthy donors to help recipients,” Scheiman says. “It’s maybe a similar concept with microbiomes. We’re sort of isolating these super rare and healthy microbes as probiotics and making them available.”
Competitive Landscape and What Makes FitBiomics Stand Out
In the crowded landscape of microbiome and probiotic companies, FitBiomics stands out through its unique approach and intellectual property. Notable companies that inhabit the microbiome, probiotic, and gut health space include: Seres Therapeutics, Kallyope, Pendulum, Seed, Solera Bio, Viome, and Zoe. AG1, the foundational nutrition supplement is also a part of this list as the company is pushing the gut health benefits of their product. Additionally, Thorne Healthtech was a personalized health and wellness company that was acquired by LCAT for $680 million.
Investing in the Microbiome, FTW Ventures on Medium, source available at: … [+] https://medium.com/@ftwvc/no-guts-no-glory-investing-in-the-microbiome-part-iii-7e686579ae1d
FTW Ventures
In terms of health tech companies that create, translate, and sell their own IP, the list is much shorter; Debut Bio and Arcaea are considered synbio companies that use biotech for consumer health. For the microbiome space in particular, $3B has been invested by VC into the microbiome space in the past decade. To give a modern example: Nestle Health Science acquired Seres Therapeutics’ Vowst™, a microbiome therapy for C. diff, which is a bacteria that causes diarrhea and colitis. The therapy costs patients thousands of dollars per dose, and the condition affects half a million people. “Comparatively, FitBiomics has been able to create our products, Nella and V•Nella, for mere millions, rather than billions, and we make them available to consumers for a fraction of the cost of these other, extremely expensive therapies. Since our products help with an array of issues stemming from the gut, such as insomnia, digestion, menopause, etc., we have the potential to positively affect millions of people, not just half a million.” the founder concluded.
Gut Microbiome Data – the NVIDIA of Wellness?
Looking ahead, Scheiman sees tremendous potential for growth. “Our goal is kind of to be like the NVIDIA of wellness, creating this biological software that we can now integrate into every corner of global health and wellness,” he shares.
The company is particularly focused on addressing modern health challenges. “Life, in and of itself, is kind of like an ultra marathon,” Scheiman reflects. “Think about fatigue as an epidemic in society coming out of the pandemic. Society is also addicted to energy like coffee, caffeine, energy drinks. So clearly, consumers and people are looking for these sorts of solutions.”
Perhaps most revolutionary is FitBiomics’ approach to product development. “As an entrepreneur, I’ve been heavily influenced by the Lean Startup model,” Scheiman explains. “I think a lot of times in science and technology, we have a habit to over-engineer and try to optimize something that doesn’t yet exist. I’m a big believer in minimum viable products, getting product to market, learning what the market wants, iterating and then optimizing.” Given that over $3 billion have already been invested in this space in the last decade alone – this approach is radically challenging the space.
Amount invested in the microbiome tech, taken from Pitchbook, image courtesy of FitBiomics.
Image courtesy of FitBiomics
This approach has helped the company achieve results with far less capital than traditional biotech requires. “We’ve literally translated biological data into these probiotics that are proprietary. No one else in the world has them,” Scheiman states. “It’s like pharma grade IP that we found a way to bring to market with orders of magnitude less capital and a fraction of the time.”
As chronic disease rates continue to climb and healthcare costs soar, FitBiomics’ approach offers a promising alternative to traditional pharmaceutical solutions. “The microbiome is the ultimate biohack,” Scheiman concludes. “We’re literally translating microbiomes of elite athletes into consumer health products. And as wild as that sounds, the crazier thing is that it’s working.”
In a world increasingly focused on preventative health and wellness, FitBiomics’ innovative approach to developing probiotics could represent the future of consumer health products. By bridging the gap between elite athletic performance and everyday wellness, they’re creating accessible solutions for common health challenges – and potentially revolutionizing the way we think about probiotics in the process.
