The Inside Story of Matt Taibbi's Departure From First Look Media

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.

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.