The Phia Controversy Explained: How Phoebe Gates Can Recover From a Major PR Crisis

If you’ve been anywhere near X or Threads for the past 24 hours, you’ve probably seen one company dominating the conversation: Phia.

The shopping app, co-founded by Phoebe Gates, the daughter of Bill Gates, and her Stanford roommate, Sophia Kianni, has come under scrutiny over allegations of cookie stuffing, which is a controversial affiliate marketing practice that can improperly claim credit for purchases, diverting commission revenue away from the publisher or creator that originally influenced the sale.

Cookie stuffing is against the rules of Impact.com (which has since suspended Phia), along with other major affiliate platforms.

If you want more details about how cookie stuffing works, I highly advise reading the Bloomberg investigation as well as the original report by researcher Ben Edelman.

So let’s break down what happened, why people are upset, and how I think the founders can turn what is currently a PR nightmare into a comeback story.

Hello, I’m Amanda Lauren, and I write mostly about interior design, lifestyle, and parenting/kids for Forbes, Real Simple, and Yahoo, among other publications, as well as a media consultant. But my opinions are mine. This Substack is a mix of industry insights and media opps (but not today!)

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According to Phia’s website, the app and browser extension help you find better prices, including deals on secondhand pieces.

Like many commerce platforms, Phia earns revenue through affiliate commissions. In theory, everyone wins: shoppers save money, brands make sales, and the platform earns a percentage.

According to Bloomberg, the start-up has raised $43 million from a star-studded roster of investors, including Karlie Kloss, Kim Kardashian, Sydney Sweeney, and Hailey Bieber.

It’s also worth noting that the co-founders also have a successful podcast on Alex Cooper’s Unwell Network called The Burnouts.

This story hits differently for me because I’ve spent years writing commerce content.

Product reviews.

Shopping guides.

Gift guides.

Best-of lists.

Those articles aren’t just content; they’re how many publications make money. Why do you think Rolling Stone has a Mother’s Day Gift Guide? It’s kind of laughable, but there’s more behind it, and this is why many publications have folded.

When someone reads an article I’ve written, clicks a product link, and makes a purchase, the publisher earns affiliate revenue. That revenue helps pay editors, writers, staff, and everyone else involved in producing quality journalism.

If another platform (like Phia) receives credit for purchases it didn’t actually drive, publishers lose revenue.

And when publishers lose revenue, journalists lose opportunities.

Anything that further chips away at publisher revenue ultimately hurts journalism, from the serious stuff to the fluffy lifestyle pieces you enjoy. Let’s be clear: this is who Phia is stealing from.

Let’s state the obvious.

Phoebe Gates isn’t facing an existential or financial crisis.

She’s enormously privileged, and regardless of what happens to Phia, she’ll have opportunities that most founders never will.

I don’t feel sorry for her.

But I also don’t think this controversy is career-ending.

Far from it.

Bill Gates is mentioned over 3000 times in the Epstein files. Do you think the founder’s association with a sex trafficker has hurt him? Not in the least.

On a personal level, I don’t buy Microsoft products and avoid using any Microsoft products unless I have to. (Occasionally, I have to do a call on Teams and there’s no way out of it).

But I don’t think most people care. Bill Gates is still one of the richest men on Earth.

Do I think Phia will take a hit from this? Sure, but I don’t think this scandal means the app is going away any time soon.

A lot of founders think the goal of crisis communications is to make people stop talking.

It isn’t.

The goal is making sure they remember the right thing six months from now.

Here’s what I think Phia needs to do ASAP.

Get a year-long retainer and keep their current PR team as well. They might have already hired someone because a spokesperson responded to Bloomberg’s report, stating, “Within the last 24 hours, we were made aware that in a recent release our codebase was causing misattributions from a subset of users. As soon as we were notified, our team worked overnight to identify, mitigate, and has since resolved the issue.”

Okay…

Phoebe Gates has built a strong social presence. While her Instagram is still public, she made her X account private. If I were her, I’d limit comments on every single Instagram post and avoid posting for a few weeks. I’d do the same for the Phia account.

I don’t think she has to do this forever, but just long enough for the news cycle to move on.

I’d also maybe put the podcast on hold for the summer. (Summer break!)

The internet has an incredibly short attention span.

There will always be another controversy or founder to cancel.

Reputation campaigns don’t work if the underlying issue hasn’t been addressed.

If affiliate partners lost trust, rebuilding those relationships has to be priority number one. They can’t make money without them.

The product has to be credible before the marketing can be.

This isn’t the first time the Phia has been in hot water. The brand only launched last year, and there was immediately an issue involving Phia’s collection of users’ web browsing history, including snapshots of the pages they visited, which included sensitive info like bank statements! Yikes!

If Phia wants consumer trust, they need to operate ethically.

Eventually, I’d go back on offense.

Host creator events.

Work with influencers.

Partner with shoppers who genuinely love saving money.

Reintroduce the brand, but only after operational issues have been addressed.

I’m a big believer that most startup controversies aren’t fatal.

They’re defining moments.

If the company acknowledges mistakes, fixes problems, and rebuilds trust, people often move on.

Consumers have short memories.

Founders get second chances all the time.

No matter what happens, both cofounders will be perfectly fine.

Also, this isn’t Elizabeth Holmes level bad. They didn’t kill anyone.

In fact, awareness may end up being one of Phia’s biggest assets.

Before this week, many people had never heard of the app. They currently have 1.5 million users, which is certainly something to aspire to, but it’s just the beginning.

All of this press means a lot of exposure.

That’s obviously not the kind of publicity any founder wants, but awareness is still awareness.

I’ll be curious to see in six months to a year from now how many users they have and if valuation has increased or decreased.

While I think what they did was despicable (I highly doubt it was an accident), I love saving money while shopping. Who doens’t?

And yes, many apps can help save money, but there’s nothing chic or cool about Rakuten or Honey. Phia is young and hot. And if they play their cards right, no one will remember this by next summer.

Every founder says they want attention.

Very few are prepared for what happens when that attention turns negative.

That’s when PR stops being about headlines and starts being about leadership.

We’ll see what happens next.

But one thing is certain:

The next chapter of this story won’t be written by social media.

It’ll be written by the founders.