Last month, Bloomberg revealed that a startup founded by Bill Gates’ 23-year-old daughter, Phoebe Gates, had dabbled in some seriously questionable business practices.
According to the reporting, Gates’ online affiliate marketing startup Phia used a shady technique called “cookie stuffing,” to collect commissions from online sales it had nothing to do with — a sneaky trick that’s landed previous affiliate marketers in federal prison.
Then, last week, Bloomberg followed up with receipts that intensified the scandal. Damning internal Slack messages suggest that both Gates and her cofounder Sophia Kianni knew about the scheme since at least December of last year.
While the story has been well hashed out by now, Bloomberg‘s sourcing is noteworthy for what it implies: the leaked Slack messages strongly suggest that someone inside Phia is hell-bent on taking Gates — and quite probably the entire company — down.
The extent of the company’s “cookie stuffing” practice — the dangers of which engineers were careful to point out to the two cofounders — is astonishing. Bloomberg managed to gets its hands on a chart showing that Phia’s average daily revenue plummeted from about $80,000 to between $10,000 and $28,000 after the company turned off the potentially fraudulent “auto pop for cookie drop” feature.
Simply put, the startup’s core product, a browser extension, automatically flagged any online sale the user was completing to take credit for it, even if the user never made use of the Phia extension.
The exact fallout of the latest developments remains unclear, but according to Bloomberg, some affiliates have already cut ties with Phia following its initial July reporting.
Gates has plenty to prove. Earlier this year, she argued that she has a “chip on my shoulder” about the assumption that she’s riding on her dad’s coattails, and that she wants “no ties to my privilege or my last name.”
The startup raised $35 million in capital at a valuation of $185 million in February.
“Our target consumer is a young woman who’s hustling,” the recent Stanford graduate told Fortune. “She shops like a genius, but she doesn’t want to waste her time doing it.”
But given her startup’s sketchy way of doing business, it seems that Gates tried to take some ethical shortcuts — and that’s clearly not sitting well with somebody within the company, who seemingly grew a conscience and rang the alarm bells by reaching out to the press.
More on the situation: Phoebe Gates Took Secret Stanford Course on Controlling Society, Used It to Recruit for Her Startup That’s Now Facing Accusations
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