Matt Taibbi, who joined First Look Media just seven months ago, left the company on Tuesday. His departure—which he describes as a refusal to accept a work reassignment, and the company describes as a resignation—was the culmination of months of contentious disputes with First Look founder Pierre Omidyar, chief operating officer Randy Ching, and president John Temple over the structure and management of Racket, the digital magazine Taibbi was hired to create. Those disputes were exacerbated by a recent complaint from a Racket employee about Taibbi’s behavior as a manager.

The departure of the popular former Rolling Stone writer is a serious setback for First Look in its first year of operations. Last January, Omidyar announced with great fanfare that he would personally invest $250 million in the company to build “a general interest news site that will cover topics ranging from entertainment and sports to business and the economy” incorporating multiple “digital magazines” as well as a “flagship news site.”

One year later, First Look still has only one such magazine, The Intercept.

Omidyar has publicly and privately pledged multiple times that First Look will never interfere with the stories produced by its journalists. He has adhered to that commitment with both The Intercept and Racket, and Taibbi has been clear that he was free to shape Racket‘s journalism fully in his image. His vision was a hard-hitting, satirical magazine in the style of the old Spy that would employ Taibbi’s facility for merciless ridicule, humor, and parody to attack Wall Street and the corporate world. First Look was fully behind that vision.

Taibbi’s dispute with his bosses instead centered on differences in management style and the extent to which First Look would influence the organizational and corporate aspects of his role as editor-in-chief. Those conflicts were rooted in a larger and more fundamental culture clash that has plagued the project from the start: A collision between the First Look executives, who by and large come from a highly structured Silicon Valley corporate environment, and the fiercely independent journalists who view corporate cultures and management-speak with disdain. That divide is a regular feature in many newsrooms, but it was exacerbated by First Look’s avowed strategy of hiring exactly those journalists who had cultivated reputations as anti-authoritarian iconoclasts.

The Intercept, through months of disagreements and negotiations with First Look over the summer, was able to resolve most of these conflicts; as a result, it now has a sizable budget, operational autonomy, and a team of talented journalists, editors, research specialists, and technologists working collaboratively and freely in the manner its founders always envisioned.

When First Look was launched last October, it was grounded in two principles: one journalistic, the other organizational. First, journalists would enjoy absolute editorial freedom and journalistic independence. Second, the newsroom would avoid rigid top-down hierarchies and instead would be driven by the journalists and their stories.

But First Look and the editorial staff it hired quickly learned that it is much easier to talk about such high-minded, abstract principles than it is to construct an organization around them. The decision to create a new editorial model left space for confusion, differing perspectives, and misaligned expectations.

Taibbi and other journalists who came to First Look believed they were joining a free-wheeling, autonomous, and unstructured institution. What they found instead was a confounding array of rules, structures, and systems imposed by Omidyar and other First Look managers on matters both trivial—which computer program to use to internally communicate, mandatory regular company-wide meetings, mandated use of a “responsibility assignment matrix” called a “RASCI,” popular in business-school circles for managing projects—as well as more substantive issues.

The lack of autonomous budgets, for instance, meant that in many cases Omidyar was personally signing off on—and occasionally objecting to—employee expense reports for taxi rides and office supplies. Both Cook, The Intercept‘s editor-in-chief, and Taibbi chafed at what they regarded as onerous intrusions into their hiring authority.

Months of constant wrangling, bubbling resentments, and low-level sniping over those perceived infringements began to explode into the open in the spring and summer. In April, First Look executive editor Eric Bates told Cook and Taibbi that Omidyar had imposed a three-month “hiring freeze” on both magazines in order to allow the company to figure out its directions and “values.” (Omidyar later told staffers that there was no freeze, and that his instructions had been misunderstood.) Both editors were in the middle of recruiting their staffs, and the restriction was viewed internally as emblematic of the arbitrary and excessive authority being exercised by First Look over the magazines’ operations.

A few months later, over the summer, Omidyar told employees that he was “re-tooling” the company’s focus and building a laboratory environment to foster the development of new technologies for delivering and consuming news—the idea, he said at the time, was to orient the company more toward “products,” as opposed to “content.” While he said that he was “as committed as ever” to both The Intercept and to Taibbi’s project, Omidyar made clear that there were no plans to launch any more digital magazines in the near term, and that the idea of a flagship site had been scrapped altogether.

Most of the journalists hired by First Look by that point were under the impression that they would be joining a large, ambitious, general-interest news organization, and the shift left many staffers deeply concerned about the company’s commitment to journalism and confused about its mission.

In June, Taibbi, Greenwald, Poitras, and Scahill wrote a joint letter to Omidyar outlining their principal grievances—the lack of clear budgets and repeated and arbitrary restrictions on hiring—and making clear that a failure to resolve them would jeopardize the feasibility of both projects.

That letter led to lengthy and often heated discussions. But they were productive: Most of The Intercept’s problems were eventually resolved. The magazine received a substantial budget, which Cook was free to use as he wished without consultation with First Look, and The Intercept resumed hiring a team of talented reporters, editors, and researchers. The site began producing stories more regularly, morale improved significantly as oversight from First Look diminished, and the team is free to do the reporting it wants to do without interference.

For a time, it appeared that Taibbi’s project had also found the right path. It, too, received its own multi-million-dollar budget, began to hire more reporters, filmmakers, and editors, and set a launch date for September.

But because the site had not yet launched, First Look continued to focus on organizational and corporate issues, and managers actively supervised and at times overruled Taibbi’s management decisions. His relationships with both First Look managers and some Racket employees who reported to him were strained.

Taibbi and First Look disagreed over the functionality of the website, the timing of its launch, which designers and programmers they would use, Racket‘s organizational chart—even, at one point, over office seating assignments.

These simmering problems came to a head this month when a Racket staffer complained to senior management that Taibbi had been verbally abusive and unprofessionally hostile, and that she felt the conduct may have been motivated, at least in part, by her gender. Temple conducted an investigation, and First Look determined that while none of the alleged conduct rose to the level of legal liability, the grievance bolstered their case that Taibbi should not be the manager of Racket. Among their concerns were the staffer’s claims that Taibbi had been privately criticizing First Look managers, particularly Ching, that Taibbi’s abrasive demeanor was alienating some on his staff, and that Taibbi instructed Racket staff to resolve any grievances directly with him rather than going to upper management.

On October 10, according to Taibbi’s account, Temple and Ching told Taibbi that he would be immediately stripped of all managerial responsibilities pending their investigation. (First Look managers dispute this account, claiming that Taibbi was never stripped of any duties.)

Taibbi was adamant that the complaint had no merit, and rejected any demotion or change in his responsibilities. On the day he was confronted by Temple and Ching, Taibbi left the office and—aside from one staff meeting he attended, after which he was instructed by Omidyar not to come back until they reached agreement on his role—did not return. He repeatedly told First Look that he would resign if it did not reverse the decision to reduce his managerial duties, and was insistent that he would accept no changes that could be construed as an acceptance on his part of the validity of the employee complaint.

Update: Racket executive editor Alex Pareene offered a statement to The Intercept saying, “Having worked closely with Matt since he hired me, I witnessed no behavior on his part that I would characterize as ‘abusive,’ and his hostility was reserved for his superiors, not his subordinates [and] I also categorically reject the allegation that there was a gendered component to his managerial issues.” Pareene’s full statement is at the bottom of this post.

None of us witnessed any of the alleged behavior on Taibbi’s part that sparked the investigation, and the complaining employee did not want to be identified in this article or speak on the record. Other Racket employees questioned the wisdom of having Taibbi—celebrated for his combative persona—acting as a corporate manager with employees responsible to him.

During weeks of negotiations through mediators within the company, the two sides appeared on several occasions to be close to reaching an agreement for Taibbi’s return, motivated by a shared desire not to scrap the soon-to-be-launched venture. Taibbi in particular felt an obligation to the dozen or so employees he had hired to find a way to salvage the project.

But each time a resolution seemed close, a new set of demands revitalized the dispute. On Friday, Omidyar told Taibbi that while he was free to return in his prior role, he must ultimately find someone else to run Racket on a day-to-day basis. More inflammatory from Taibbi’s perspective was Omidyar’s demand that Taibbi immediately terminate his employment agreement with First Look and become an independent contractor, a change Omidyar argued would free Taibbi of the constraints that come with being a corporate manager while diminishing his authority to act formally and legally on First Look’s behalf (early on, Greenwald, Poitras, and Scahill all opted to be independent contractors rather than First Look employees in order to maximize their freedom to speak out and act).

Over the weekend, Taibbi reached the conclusion that his relationship with Omidyar, Temple, and Ching had become irreversibly poisoned, and that no agreement would shield him and Racket from their ongoing involvement and interference. Rather than continue the negotiations, he decided to end them and walk away from the project. On Monday morning, he told Cook and Greenwald that he was leaving. The next day, after New York reported that Taibbi had been on leave, First Look announced his departure.

The fate of the remaining Racket staff remains uncertain. Taibbi’s departure means that First Look has lost a talented, unique, and influential journalistic voice before he published a single word. After months of struggle and negotiation, The Intercept has arrived at the point where it can function effectively: with full editorial freedom and an ample budget. But First Look and Taibbi failed to reach a similar mutual understanding. Those two radically different outcomes underscore the ongoing difficulty of finding the ideal model for well-funded independent journalism.

Statement from Racket executive editor Alex Pareene:

Working with Matt Taibbi was one of the best experiences of my career and I’d be thrilled to have the opportunity to do so again. From my perspective, the management of First Look Media repeatedly took incidents that should’ve been minor hiccups of the sort experienced at any media company or startup and, through incompetence, escalated them into full-blown crises. Having worked closely with Matt since he hired me, I witnessed no behavior on his part that I would characterize as “abusive,” and his hostility was reserved for his superiors, not his subordinates. He certainly was no more “combative” than any number of other editors I’ve worked with, including Intercept editor-in-chief John Cook. I also categorically reject the allegation that there was a gendered component to his managerial issues. We were successfully working to address those issues when First Look once again stepped in to fuck things up. I regret that the world won’t get a chance to see Matt Taibbi’s Racket.

Photo: Richard Renaldi