Phia’s team is locked in — literally. The startup is laser-focused on building an AI shopping agent, but also, after a snowstorm barreled through New York City, Phia founders Phoebe Gates and Sophia Kianni can’t leave their respective apartments. So it’s a rarity that when I chat with the former Stanford roommates and best friends, they are not together, nor are they in the Phia office.
“We were like, ‘It’s okay, stay home.’ It’s dangerous. Nobody needs to go to the office,” Kianni told TechCrunch, laughing. But while she and Gates hunkered down at home, many of their employees still made the trek to the office. “Our team is sending Slack photos right now … The entire porch is snow.”
Such is the life of a fast-growing startup. Phia is 10 months old, yet it just closed a $35 million funding round led by Notable Capital with participation from Khosla Ventures and returning investor Kleiner Perkins.
It’s a quick turnaround. When I last spoke with Phia in October on the TechCrunch Disrupt stage, they were just one month removed from an $8 million round that included checks from celebrity investors like Kris Jenner, Sara Blakely, and Sheryl Sandberg. (Yes, Phoebe Gates is the daughter of Bill and Melinda; no, her parents are not bankrolling her startup.)
“We are just at such a prime time of opportunity,” Gates said to explain the new fundraise. “Commerce itself for the consumer hasn’t really been adapted in the last 30 years, and the opportunity to make a truly personalized, end-to-end shopping experience is today.”
With hundreds of thousands of monthly active users, Phia has achieved 11x revenue growth since launch and onboarded 6,200 retail partners.
As it stands, Phia is a mobile app and a web browser extension that seeks to help shoppers save money by showing them resale or secondhand alternatives to the products they’re looking for. If you’re about to buy a brand-new Anthropologie dress for $200, for example, Phia could show you that the same dress is available on Poshmark for $80.
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There’s a sustainability angle to buying secondhand — Kianni is a climate activist and former adviser to the United Nations — but as a tech company, the founders understand that their way to build a customer base is to simply help them save money. Beyond resale options, Phia might also recommend similar items from less expensive brands, which is where its partnerships come in.
“A lot of [brand partners] were very much taking a bet on us and joining the platform when we had less proof points,” said Kianni. When brands make sales on Phia, the app gets a cut, similar to an affiliate marketing model. “With new offerings that we have, we actually have data to be able to show things like, we can give them a 15% increase in average order value, or 30% stronger new customer acquisition, or 50% lower return rates.”
Much of Phia’s success stems from its founder-led marketing tactics. As Gen Z digital natives, Gates and Kianni have amassed over 2 million followers across social media platforms. This includes their podcast The Burnouts, in which the duo talk about their entrepreneurship journey and interview prominent figures in business and entertainment, from Bryan Johnson to Paris Hilton.
The Phia founders have ambitions to turn the app into what Gates calls a “holistic shopping agent,” which is why the company plans to use its newfound capital to recruit top machine learning engineers.
“Our number one goal was always bringing the top engineering talent specifically into our company, and being able to have capital that can really attract the best people,” Kianni said.
The current Phia team, who all work out of the New York office (so long as there’s not a massive snowstorm), is about 20 people, which is small for a company with somewhat nebulous ambitions to revolutionize commerce — but as Kianni puts it, “It’s not even about team size anymore. It’s just about the quality of the talent you’re attracting.”
To bring their ideas to fruition, they’re going to need that kind of talent.
“Gone are the days where you would go to a static HTML page that’s not personalized for you, your taste, your sizes, and what you already own that’s in your closet,” Gates said.
As the company grows, she wants people to “go to Phia first, really to start that shopping journey from the top of the funnel, both with your own personalized feed and outfit recommendations for you based on your current closet, or understanding what you might want to donate or sell.”
In order to create such personalized experiences, however, Phia needs to collect user data, which is tricky to accomplish in a secure manner that keeps users informed about how much they’re sharing.
As reported by Fortune in November, cybersecurity researchers found a feature in Phia’s browser extension that was able to capture the HTML code of the websites users visited while using the extension, essentially collecting data from their browser history. The company removed the feature once notified and said in a statement to Fortune that “the extension previously logged webpage content to understand if the site was a shopping destination,” and that Phia has “never in the past, or at present, stored this data.”
“We always are extremely transparent with users about the reasons why we are requesting certain permissions, and everything is displayed very clearly up front,” Kianni said. “In terms of the way that we’re building our tech and our back end, we’ve always made sure all data is aggregated, anonymous, and only used for the purpose of being able to help users find the best products as efficiently as possible.”
Hopefully that incident is remembered as a growing pain for the startup, and not an indicator of problems to come — because Phia is right that online shopping could use a makeover.
“I think that’s where AI agents play a huge role,” Kianni said. “All this cumbersome, manual work really can become compressed and be able to get you to the shortest path possible to the perfect item.”
“We’re on the cusp of a completely new way of shopping,” Gates added. “We want to make the entire ecosystem just way more efficient and make shopping fun again.”
