Former staffers blindsided by Carlos Watson’s surprise announcement that OZY is returning

OZY Media on Friday shut down, with a five-minute call to employees in which CEO Carlos Watson didn’t take questions. The scandal-plagued company also sent a terse letter to investors, saying that a financial restructuring firm had been retained.

But, but, but: This morning Watson went on a TV tour to announce a change of heart, and that OZY will remain open.

This “Lazarus moment” came as a shock to many of those employees who lost their jobs (and email access) last week. A small number did receive calls over the weekend, although some chose not to engage. Staffers told Axios Watson’s they were surprised by Watson’s comments on TV and it was the first they were hearing of any plans to bring OZY back.

The story of OZY became so viral so fast because it highlighted the worst parts of every industry in America: naive investors throwing money at poorly run companies, digital media outlets faking their numbers and over-zealous startup founders toeing the line between dishonesty and delusion, per a postmortem by Axios’ Sara Fischer:

Watson also argued on TV today that Ron Conway surrendering his shares didn’t matter because Conway’s investment was so small, and that he called Sharon Osborne “an investor” because she had received shares as part of a legal settlement over a trademark infringement claim. Oh, and he took plenty of shots at reporters who’ve been covering this sorry saga (no, he still hasn’t spoken with Axios on the record).

“I think [Watson] is delusional enough to believe what he was doing was a part of the path to greatness, and that the idea of OZY can still win,” a (now former) OZY employee tells Axios. “And that’s why it still seems he won’t apologize any time soon, and will go down all guns blazing.”

Watson suggested that the worst was behind OZY, and that it now will engage in a difficult rebuilding process. But, in reality, the worst may still be yet to come.

An outside law firm continues to investigate fraud allegations, including that phony phone call with Goldman Sachs.There is at least one, and possibly two, federal government investigations.And it remains unclear how much cash OZY still has on hand, given the company’s refusal to elaborate on the Series D funding that Watson once told employees the company had raised. Plus, the board of directors is now down to just two members: Watson and venture capitalist Michael Moe (who also isn’t returning requests for comment).

The bottom line: OZY is over. Even if Watson doesn’t know it yet.

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