Fear’s team is literally trapped. The startup is focused on building an AI shopping agent, but Phia founders Phoebe Gates and Sofia Chianni are unable to leave their apartments after a snowstorm hits New York City. So when I chat with my former Stanford roommate and best friend, it’s unusual for them not to be with me or in Fear’s office.
“We were like, ‘Okay, let’s stay home.’ It’s dangerous. No one needs to go to the office,” Kiani told TechCrunch with a laugh. But while she and Gates hunkered down at home, many employees still headed to the office. “Our team is sending out photos on Slack right now… it’s snowing all over the balcony.”
Such is the life of a fast-growing startup. Phia is 10 months old and just closed a $35 million funding round led by Notable Capital with participation from Khosla Ventures and returning investor Kleiner Perkins.
That’s a quick response. When I last spoke to Phia on stage at TechCrunch Disrupt in October, they were just a month removed from an $8 million round that included checks from big-name investors like Kris Jenner, Sarah Blakely, and Sheryl Sandberg. (Yes, Phoebe Gates is Bill and Melinda’s daughter. No, her parents didn’t fund her startup.)
“We’re at a really great opportunity,” Gates said of the new funding. “While consumer commerce itself hasn’t been well-adapted in the past 30 years, the opportunity to create a truly personalized end-to-end shopping experience exists today.”
With hundreds of thousands of monthly active users, Phia has achieved 11x revenue growth and signed up 6,200 retail partners since launch.
As it stands, Phia is a mobile app and web browser extension that aims to help shoppers save money by showing them resale and used alternatives to the products they’re looking for. For example, if you’re looking to buy a brand new Anthropologie dress for $200, Phia can show you that the same dress is available on Poshmark for $80.
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There’s a sustainability angle to buying second-hand — Mr. Chiani is a climate change activist and former adviser to the United Nations — but as a technology company, the founders understand that the way to build a customer base is simply to help them save money. Beyond resale options, Phia may also recommend similar products from cheaper brands, which is where its partnerships come into play.
“A lot of (brand partners) were betting on us and joining the platform when there was little evidence,” Chianni said. When a brand makes a sale on Phia, the app also gets a cut, similar to an affiliate marketing model. “We actually have data that can show us that new products we offer can increase average order value by 15%, increase new customer acquisition by 30%, or reduce return rates by 50%.”
Much of Phia’s success is due to its founder-driven marketing strategy. As digital natives of Gen Z, Gates and Kiani have amassed more than 2 million followers across social media platforms. This includes their podcast, The Burnouts, where they talk about their entrepreneurial journeys and interview some of the biggest names in business and entertainment, from Brian Johnson to Paris Hilton.
Phia’s founders have ambitions to turn the app into what Gates calls a “comprehensive shopping agent,” so the company plans to use the new funding to hire top machine learning engineers.
“Our biggest goal has always been to bring the best engineering talent into our company specifically and to make sure we have the capital to really attract the best talent,” Chianni said.
Fire’s current team, which all works out of its New York office (unless there’s a big snowstorm), has about 20 employees, a small number for a company with vague ambitions of revolutionizing commerce, but as Chiani says, “It’s not even about the size of your team anymore. It’s just the quality of the people you’re attracting.”
They will need such talent to bring their ideas to life.
“Gone are the days of accessing static HTML pages that aren’t personalized to your tastes, sizes, and what you already own in your closet,” Gates says.
As the company grows, she wants people to “go to Fia first and really start their shopping journey at the top of the funnel, both with their own personalized feed and recommended outfits based on their current closet, or understanding what they want to donate or sell.”
However, in order to create these personalized experiences, Phia needs to collect user data. This is difficult to achieve in a secure way that keeps users informed of how much they are sharing.
As Fortune reported in November, cybersecurity researchers discovered a feature in Phia’s browser extension that allows users to capture the HTML code of websites they visit while using the extension, essentially collecting data from their browser history. The company removed the feature after being notified, saying in a statement to Fortune that “this extension previously recorded the content of web pages to understand whether a site was a shopping destination,” and that Fear “never, in the past or present, stored this data.”
“We are always very transparent with our users about why we request certain permissions, and everything is very clearly displayed up front,” Chianni said. “In terms of how we build our technology and backend, we have always ensured that all data is aggregated, anonymized, and used only for the purpose of helping users find the best products as efficiently as possible.”
I hope this event will be remembered as growing pains for the startup rather than a sign of trouble ahead. Because Fear is right that online shopping can be transformative.
“I think AI agents will play a big role there,” Kiani said. “All of this tedious manual work is compressed, allowing you to complete the perfect item in the shortest possible distance.”
“We are in the midst of a whole new way of shopping,” Gates added. “We want to make the entire ecosystem even more efficient and make shopping fun again.”
