Phia's 'Growth' Was a Feature, Not a Bug

In the venture capital world, we talk a lot about 'growth hacking.' But there is a wide, legal, and ethical chasm between hacking a growth loop and hacking a P&L through fraud. Based on reporting first detailed by TechCrunch, as well as investigations from Bloomberg and Puck, Phia—the shopping engine co-founded by Phoebe Gates and Sophia Kianni—hasn't been hacking growth. It has been fabricating it.

When Phia launched last April, the pitch was seductive: a 'Google Flights-like site for shopping' that would streamline price discovery across retailers. On paper, it sounded like a utility. In practice, according to Bloomberg, it functioned as a machine for 'cookie stuffing.' For the uninitiated, cookie stuffing is the act of taking credit and commissions for affiliate purchases that the platform didn't actually help generate. It is a predatory practice that steals referral revenue from honest affiliate marketers and, as Bloomberg notes, is typically banned by the very marketplace contracts Phia signed.

For a while, Phia tried to play the 'innocent startup' card. A company spokesperson initially told Bloomberg that Phia only discovered the issue after the outlet reached out. By early July, the narrative shifted: the cookie stuffing was just a 'bug.'

But the evidence suggests this wasn't a coding error; it was a business model. Bloomberg reports that the cookie stuffing was actually a purposefully built feature that could be toggled on and off. Even more damning, leaked Slack messages cited by Bloomberg indicate that Gates and Kianni were discussing these practices with engineers and other executives as far back as December.

As a skeptic of the 'founder-led' hype cycle, I look at the numbers. Bloomberg reports that cookie stuffing accounted for a 'good chunk' of Phia's sales. Once the practice stopped, the company saw a 'sizable drop' in daily revenue. When you strip away the fraudulent commissions from retailers like Nike and Nordstrom, what is actually left of Phia's value proposition? If the revenue vanishes the moment you stop cheating the system, you don't have a viable shopping engine—you have a vanity project fueled by deceptive metrics.

This pattern of disregard for rules and users isn't isolated to the affiliate revenue. TechCrunch reports that Phia has previously faced controversy over secretly collecting sensitive data, which included tracking user behavior across the web and transmitting that data back to company servers.

When a company combines fraudulent revenue generation with invasive data harvesting, it suggests a culture that views the user and the partner not as customers to be served, but as resources to be exploited for the sake of a growth chart. It is no wonder that, as Puck reports, investors have 'got the ick' from Phia's aggressive lean into affiliate marketing. Puck also found that several brands were completely unaware they were even listed on the app.

To make matters worse, the internal house is collapsing. Puck reports that Phia has lost nearly half of its full-time employees since the start of the year. While the company is now attempting damage control—hiring a head of compliance and issuing transaction reversals to brand partners, according to a statement provided to TechCrunch—the damage to the brand's integrity is likely permanent.

In a statement to TechCrunch, an unnamed Phia spokesperson claimed that any features causing misattributions were removed by July 7. While the company says it will 'learn' from this, the reality is that Gates and Kianni allegedly knew about this 'feature' for months while telling the public and their partners the opposite.

Phia isn't a failure of technology; it's a failure of ethics. If your 'Google Flights for shopping' only works when you're stealing commissions from other marketers, you haven't built a product. You've built a facade.