By now, many of you have heard about the news and accusations around Phia, a company co-founded by Phoebe Gates (of Bill Gates) and Sophia Kianni. If you haven’t already heard about this, congratulations, your side of the internet is probably much more mentally sane than mine.
I debated writing this at all, partially because I firmly believe that as a female founder myself, one of the worst things we can do as women is tear another female founder down. There are already so few of us. But that doesn’t mean I can’t also stick up for what is right, and call out bad actors that are ruining it for the rest of us.
So, some context:
Phia is a commerce business that identifies where you can get a look for less across the internet — if you’re looking at a top on Revolve, they could show you a version on Poshmark, etc.
Last month, Ben Edelman, an independent researcher, and Business Insider each released articles detailing the ways in which Phia was participating in a practice known as “cookie stuffing,” which basically means they were taking credit away from publishers, creators and anyone else by re-attributing affiliate revenue to themselves when they shouldn’t have been. If you’re curious in hearing more about the nitty gritty of the scandal, you can check out two podcasts I’ve been featured in around this — Brian Morrissey and Affiliate Nerd Out (with Ben Edelman).
Phia first said this was a bug they weren’t aware of, but then last week Slack messages were leaked showing both Phoebe and Sophia pushed their teams to commit these updates to their codebase directly, oftentimes with engineers pushing back and asking questions.
This obviously impacted the entire ecommerce ecosystem, including Scout. If you had Phia downloaded and took advantage of a Price Drop in the last nine months, Phia more than likely stole the commissions from Scout.
As someone who has been in the space for the better part of a decade, and is now building in their same sandbox, I have quite a few concerns about how this will impact the future of commerce tech, AI. I also want to ensure that I clarify where Scout sits in the ecosystem.
First, Scout does not cookie stuff. I didn’t think I’d ever have to clarify that. We earn a commission when you click one of our links within Scout, and do not undermine any existing affiliate tracking at checkout. It is our finder’s fee from the retailer that tells them that we sent you. It costs you nothing to give us that fee, and it’s greatly appreciated since we provide a free service to our users.
Second, we believe we’re providing more value than Phia to you all — and frankly, to any other product on the market today. That’s why I quit my job to continue to build this. Instead of surfacing products that are similar with not a ton of context, we’re checking over 10,000 products everyday to ensure we’re getting you updating pricing (and soon stock) information for every item in your collection. We are more than a list building app like others as well.
Finally, we firmly believe that this behavior should not be tolerated. This is stealing — and stealing from another female-founded business (as most of the other competitors in the space are) makes it that much worse.
The Phia conversation both worries and empowers me.
The worries:
Makes me feel as a female founder that funding will be more difficult if I need to raise (I have no proof here, just my candid thoughts)
I feel I will need to explain our business model more than we would have and go even further to prove we’re compliant, versus being trusted that we are
I worry that affiliate marketing alone won’t be seen as a serious business model (although it’s not the only one we’re planning for)
I have a new fear of due diligence in that it could be more intense and therefore expose us to IP theft or other nasty consequences as a result of investors needing to know more than ever before
The fact that I even have to send this email means that I’m taking away my precious work hours to discuss a competitor is incredibly unsettling but I think it’s necessary
The empowering part:
I’m an expert at building commerce businesses. These people weren’t and that is probably part of the problem.
I understand the rules and how to play the game.
I have real, professional experience and know how to handle managing a team and checking people’s work effectively
Rules are often here to protect us. By remaining compliant, we can continue to move our business forward knowing we’ve done everything we could to protect the business in this way
It’s provided a platform for me to brag about all the great things we’re working on at Scout
High profile fundraises mean that there is more opportunity out there for everyone. Phia’s shows that it’s possible in some way.
I really hope this is the last time I comment on this saga. I’d rather brag about what we’re working on and sharing insights I’ve learned in the last month. Hoping to get back to that next week.
Madeline
Co-Founder and CEO, SCOUT