Phia’s team is locked in, quite literally. The startup is intensely focused on building an AI shopping agent, but after a snowstorm barreled through New York City, founders Phoebe Gates and Sophia Kianni cannot leave their respective apartments. It is a rarity that when we speak, the former Stanford roommates and best friends are not together in their office.
They decided safety was paramount, telling their team to stay home. Yet, many employees still made the trek to the office, sharing photos of the snow-covered porch on Slack. Such is the life of a fast-growing startup.
Despite being only ten months old, Phia just closed a $35 million funding round led by Notable Capital, with participation from Khosla Ventures and returning investor Kleiner Perkins. This marks a quick turnaround. Just a few months prior, the company had raised an $8 million round that included celebrity investors like Kris Jenner, Sara Blakely, and Sheryl Sandberg. Phoebe Gates is the daughter of Bill and Melinda Gates, but her parents are not bankrolling the startup.
The founders see a prime opportunity. Commerce for the consumer has not significantly adapted in decades, and they believe the time is right to create a truly personalized, end-to-end shopping experience.
Phia already has hundreds of thousands of monthly active users, achieving 11x revenue growth since launch and onboarding 6,200 retail partners. The service is a mobile app and browser extension that helps shoppers save money by showing resale or second-hand alternatives. For example, if you are about to buy a new dress for $200, Phia might show you the same dress available on a resale platform for $80.
There is a sustainability angle to buying second-hand, and co-founder Sophia Kianni is a climate activist and former advisor to the United Nations. However, as a tech company, the founders know their path to building a customer base is to simply help people save money. Beyond resale, Phia also recommends similar items from less expensive brands through its partnerships.
Many brand partners initially took a bet on Phia when the company had fewer proof points. Now, with new offerings, Phia can show partners data indicating benefits like a 15% increase in average order value or 50% lower return rates. The company earns a cut from sales made through its platform, similar to an affiliate model.
Much of Phia’s success stems from founder-led marketing. As Gen Z digital natives, Gates and Kianni have amassed over 2 million followers across social media platforms. They also host a podcast where they discuss entrepreneurship and interview prominent figures.
The founders aim to turn Phia into a holistic shopping agent. The new funding will be used to recruit top machine learning engineers to achieve this vision. Attracting the best talent is their number one goal.
The current team in New York is about twenty people, which is small for a company with ambitions to revolutionize commerce. However, the founders believe success is about the quality of talent, not the size of the team.
They envision a future where shopping starts with a personalized Phia feed, offering outfit recommendations based on your existing closet and suggesting items you might want to donate or sell. This requires moving away from static, impersonal web pages.
Creating such personalized experiences involves collecting user data, which must be done securely and transparently. Last November, cybersecurity researchers identified a feature in Phia’s browser extension that could capture HTML code from visited websites. The company removed the feature immediately, stating it never stored this data and that the logging was only to identify shopping destinations.
The founders emphasize transparency with users about data permissions, asserting that all data is aggregated, anonymous, and used solely to help users find products efficiently. They hope this incident is remembered as a growing pain, not a sign of future problems.
The founders believe online shopping is ripe for change. AI agents can compress cumbersome manual work, creating the shortest path to the perfect item. They feel they are on the cusp of a completely new way of shopping, aiming to make the entire ecosystem more efficient and fun again.