Silicon Valley bankrolls its newsroom

By Miguel Helft, senior writer @FortuneMagazine July 25, 2013: 7:22 AM ET

Carlos Watson at Ozy Media's headquarters in Mountain View, Calif.

(Fortune)

Ozy media's drab, cramped offices are hardly what you'd picture for the headquarters of an ambitious news startup, especially one backed by Silicon Valley royalty. Ozy is not in New York, Los Angeles, or San Francisco, but rather in Mountain View, Calif., on the third floor of a tan 1970s-era building. Inside, a door with an Ozy Media nameplate opens onto the first of three small rooms, where a handful of people are typing away on computers that sit atop mismatched Ikea tables. The ceilings are low.

Unexpected is precisely what Carlos Watson, founder of Ozy Media, is going for. Everything from its name -- inspired by Percy Bysshe Shelley's sonnet "Ozymandias" -- to its ambition, concept, approach to the news, and, yes, location aims to be different. Launching later this year, Ozy will cater to what Watson calls the "change generation." It's not so much an age group -- he expects readers will range from young baby boomers to millennials -- as a class of informed, worldly people who thrive on change. Says Watson: "They're a group that won't just tolerate things that are different but embrace things that are different."

If Watson's words evoke something of Apple's famous "Think Different" ad campaign, that's not entirely surprising. Ozy's star financial backer is Laurene Powell Jobs, the intensely private widow of Apple co-founder Steve Jobs. Powell is one of three Ozy board members and may contribute content for the site. Watson won't say what kind of topics she might focus on. "She has a wide set of interests," he says. Powell has long been involved in education reform. She is the chair of College Track, a nonprofit she and Watson co-founded in 1997, which helps low-income students get into college. (Watson is still a board member.) She also founded the Emerson Collective, which makes grants supporting education, conservation, and social justice. More recently Powell spoke out in favor of immigration reform. (Powell declined to be interviewed.)

A consummate networker, Watson has gotten other heavyweights to back him. Larry Sonsini, who heads the firm Wilson Sonsini Goodrich & Rosati, is not only Ozy's lawyer and an investor but also a business adviser, a role he has played with countless entrepreneurs from Apple's Jobs to Scott McNealy of Sun Microsystems. Ron Conway, the Valley's best-known angel, has put money in, as have David Drummond, Google's chief legal officer, and Dan Rosensweig, CEO of Chegg.com. The company has raised a few million dollars, according to people familiar with the project. Watson won't comment.

This is not the first time an elite group has banded together to start a news site reflecting its tastes. In 2005, Arianna Huffington, investor Kenneth Lerer, and others launched the Huffington Post as a left-leaning answer to the Drudge Report and Fox News. That venture's success notwithstanding, the number of general-interest publications that have succeeded in the digital era is small. Profits, when they exist at all, have been scant -- especially compared with the billion-dollar exits of tech startups in Ozy's neighborhood. At the same time, Ozy's target audience is inundated with content choices from the New York Times and National Public Radio to BuzzFeed and Slate.

Watson promises that Ozy will stand apart. The advertising-supported site will focus on just a handful of well-selected stories every day. It will aim to create buzz and community (and revenue) with live events. While his readers will no doubt visit other news sites, Watson hopes that with a mix of quality and arresting design Ozy will become their "first and favorite" news site. "It's almost a crime that there is not a new information source that we truly love," he says. "And I mean love in the way Apple fans truly love Apple, or in the way HBO fans have loved HBO."

Watson has been recruiting print journalists, radio producers, and videographers. His team of about a dozen includes veterans of GQ, The Economist, and NPR. Editorial director Liz Lufkin is a longtime journalist who was editor of Yahoo's homepage when it was most visited. Samir Rao, a Goldman Sachs alum and Ozy co-founder, is head of operations. "It's hugely ambitious," says Ozy investor Rosensweig. A veteran tech and media executive who held top posts at Yahoo and CNET, Rosensweig believes Watson can pull it off: "It's one of those things where you are going to say, 'Why hasn't there been something like this before?' "

The idea for Ozy was hatched during the 2008 presidential campaign. The generational shifts afoot were all ripe for more scintillating coverage, Watson argues. "I couldn't find fresh, original stories, and I probably wasn't alone," he adds.

The following year Watson, who was an anchor at MSNBC at the time, decided to launch a blog, called the Stimulist, to try to fill the gap. Soon after, however, his show was canceled, and Watson left journalism to take a job at Goldman Sachs, where he advised media and education companies. (A graduate of Harvard University and Stanford Law School, Watson has had an eclectic career, with stints at McKinsey, CNN, and Achieva College Prep, a company he founded and later sold to competitor Kaplan.)

Two years later Watson left his job in New York and moved to Silicon Valley to take on the idea of a new media site once again. One of the first people he went to was Powell. "She got it right away," says Watson. An irrepressible marketer for Ozy, Watson has gone so far as to overstate the role of his most illustrious backer at times, first describing Powell as the company's largest investor and later admitting she is just one of many.

Watson is charismatic, telegenic, and, at times, theatrical. People named him one of its "hottest bachelors" in 2004, and, at 43, he is still a bachelor. During a recent conversation outside Ozy's offices, he picks up his chair and turns it around to face backward, away from me. All the media sites today, even the good ones, look that way, he says, as I stare at the back of his head. He turns around; Ozy will look forward.

Ozy will launch in early August to an invitation-only group, a well-worn startup tactic. Mobile versions will arrive next year. At his office in July, Watson shows me a prototype with sample daily pages. Most stories are relatively short -- about 500 words -- and crisply written. The photographs are large and impactful. Every day a section titled Presidential Daily Brief recaps the top news. There's a daily profile of a rising star (most I've never heard of -- just how Watson wants it). Sections with names like Good Sh*t, Fast Forward, and Acumen dish up something new, be it a book, movie, trend, or place to travel. There's a flashback to some historical event of significance. And there's an opinion piece, which Watson promises will not be predictable. (Ozy's backers may have a decidedly liberal sensibility, but Watson says the site won't hew to any ideology.)

Watson closes his computer and sits back. He begins musing about his grandmother, who was born in 1902 in Jackson, Miss. She discovered much about the modern world -- be it the rise of Winston Churchill or women going to college -- through Life magazine. Ozy may never be as significant, yet Watson hopes it will help broaden the horizons of its readers in the same way. He named the company after Shelley's poem for a reason, he says. Though its central theme deals with the ephemeral nature of power, the sonnet has been interpreted in multiple ways. For Watson, it carries its own meaning: "Think big, but be humble." He will need both qualities in spades for Ozy Media to succeed.

This story is from the August 12, 2013 issue of Fortune.