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Phoebe Gates, the daughter of billionaire Bill Gates, is facing a serious crisis at her new technology company, which recently raised $35 million.
Her shopping app Phia has come under heavy accusations of commission theft, raising questions about inexperienced leadership and a mass employee exodus.
Although the young entrepreneur has worked hard to prove that her company does not rely on her famous last name, the latest scandal has seriously damaged her business credibility. Phia, which Phoebe Gates launched in 2023 with her former Stanford roommate Sophia Kianni, is facing accusations of cookie stuffing, a controversial tech practice in which companies secretly claim commissions from sales they did not actually generate.
From a major investment to controversy
The company’s journey began with major attention, including a high-profile interview with The New York Times. In January, Phia raised $35 million from leading investment funds, with celebrities such as Hailey Bieber, Sydney Sweeney, Ice Spice and Mindy Kaling also joining the project.
The concept behind the app appeared attractive. Users install a browser extension that finds cheaper options or more affordable alternatives to expensive designer products, such as a $400 Dôen dress or Reformation pants.
Phia earns commissions from every transaction, and by the time it raised funding, the company reportedly had more than one million users and generated around $300,000 in monthly revenue.
However, Bloomberg recently reported allegations of serious misconduct. The browser extension allegedly replaced other retailers’ shopping links with its own, allowing the app to receive commission payments even from customers it did not actually bring in.
A similar controversy previously affected Honey, the popular discount browser extension owned by PayPal, which faced a class action lawsuit over similar accusations.
A bug or deliberate practice?
A company spokesperson defended Phia, saying the issue was caused by an error in a recent version of the code and that it was quickly fixed.
Journalists later tested the tool again and confirmed that it no longer replaced links improperly. However, sources familiar with the company remain skeptical. They reportedly find it difficult to believe that such a profitable mistake went unnoticed, especially from founders who have promoted their close involvement in every part of the business.
The company is also facing other challenges. Phia claims to offer products from more than 700 brands, but some companies reportedly had no idea they were featured on the platform. Others allegedly refused cooperation because they did not want to be promoted through an app focused on helping customers find cheaper alternatives.
Some investors are also said to have backed away because of concerns about the company’s aggressive commission strategy.
Employee departures raise concerns
Phia’s reliance on commission-based revenue has proven to be a questionable business model, but the biggest problems may be inside the company itself.
Since the beginning of the year, nearly half of the full-time employees have reportedly left, including key members of the product and technology teams.
Former employees blamed a typical unhealthy startup culture. They claimed the working hours were exhausting and that the young founders struggled to trust employees and delegate responsibility.
Still, in Silicon Valley’s competitive startup world, such intense founder-driven environments are often exactly what early-stage investors reward.
The question remains whether Phia will recover from the controversy or become the first major failure of Bill Gates’ young heir.
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