{{ 'now' | timezone: 'America/New_York' | date: '%b %d, %Y' }} |
|
|
|
Hi, and welcome back to Line Sheet. Lauren’s O.O.O. is in full effect, and
Malique “Malique@puck.news” Morris is here with a full newsletter takeover on this hazy Thursday at Puck HQ.
For today’s main event, Malique reports on the mood inside Phia, the A.I.-enabled e-comm play fronted by Phoebe Gates (daughter of Bill) and backed by a grip of celebrities including Hailey Bieber and
Karlie Kloss. While the company has course-corrected after a recent report raised questions about its affiliate revenue practices, there’s still an open question about whether it can make its model work in the long term.
Elsewhere, Malique has news on J.Crew’s return-to-office mandate, which has some far-flung teams squirming, and a status update on Ssense’s turnaround effort. As usual, this Thursday send is available exclusively to Puck Inner Circle members, so
upgrade now if you haven’t already. It’s worth it—and staying in today to read is healthier than going outside, at least in the Northeast.
Also mentioned in this issue: Zendaya, Sophia Kianni, Rachel Zoe, The Odyssey, Ludovic Maire,
Sydney Sweeney, Donald Trump, Montreal, Leena Nair, Ice Spice, Rami Atallah, OpenAI, Law Roach, Mindy Kaling, Philippe Blondiaux, and more. |
|
|
|
A MESSAGE FROM OUR SPONSOR |
|
|
|
| Malique Morris
|
|
Three Things You
Should Know…
|
- J.Crew’s R.T.O.:
Amid all its executive reshuffling, J.Crew is also instituting a mandatory three-day in-office policy, I’m told. Employees who don’t live within commuting distance of the company’s New York headquarters will have until September to confirm whether they can relocate by February, or July if they have kids. “At J.Crew Group, we are proud to support
a culture where our associates have an ownership mindset and are connected to the work, to the business, and to one another,” a spokesperson confirmed. “Having our teams together in-person is the best way to achieve these goals.”
Makes sense, although return-to-office mandates often double as a way to quietly trim the workforce. From what I’ve heard, there are entire teams within the organization that don’t live anywhere near New York. J.Crew already implemented a small round of
layoffs earlier this year; the new policy practically guarantees that many more will exit. In any case, it’s yet another tactic in the turnaround playbook. - Ssense’s A.I. drama: When Ssense C.E.O. Rami Atallah and his brothers bought back the company earlier this year, they certainly knew that they would need
to make radical changes. They’ve already downsized their Montreal headquarters and begun leaning on A.I. for creative output, with the potential for broader applications. During an April all-hands meeting, Atallah outlined the restructuring plan and hinted at more machine-aided initiatives to come.
Using A.I. tools may help streamline operations, but it has also naturally unsettled employees and foreshadowed meaningful changes. Earlier today, I learned that Ludovic Maire,
the company’s senior director of technology, has resigned. (Ssense declined to comment on Maire’s departure.) I’m not sure why Maire is leaving, but losing senior technology deputies doesn’t seem like an auspicious sign. - Zendaya’s red carpet Odyssey: It was striking to see Zendaya wear a winged dress by Matières Fécales on the red carpet at The Odyssey’s premiere in New York. Yes, the avant-garde indie label
held the dress for her stylist Law Roach for two years, but Zendaya is a longtime ambassador at Louis Vuitton. As we know, today’s red carpet is dominated by the conglomerates who can afford to make custom gowns for actresses, many of whom are under contract. Stars wear smaller designers for press junkets and talk shows, but it’s expected that
they reserve marquee red carpet appearances for household names. Roach’s decision to prioritize an indie label for the premiere of the year’s most anticipated movie event will undeniably have ripple effects.
|
|
|
|
Phoebe Gates’s celebrity-funded A.I. shopping startup, Phia, has been confronting its first
real crisis after allegations of cookie-stuffing. But is the fragility of the affiliate-driven business model a larger issue? |
|
|
|
Phoebe Gates has been adamant about not wanting to rely on the legacy and largesse
of her father to legitimize Phia, the A.I.-powered shopping startup that she co-founded with her Stanford roommate turned influencer Sophia Kianni in 2023. Of course, that’s wistful posturing when your father is Bill Gates, the godfather of the modern software business and a mega-philanthropic centibillionaire. And also, well, it’s B.S. In January, Phia raised $35 million from Notable Capital, an early backer of Quince; Khosla Ventures; Kleiner Perkins; and a
roster of celebrity investors including Hailey Bieber, Karlie Kloss, Sydney Sweeney, Ice Spice, Rachel Zoe, and Mindy Kaling. Few first-time tech founders announce their startup via a profile in The New York Times. And Gates’s surname surely
helped while Bieber and other photogenic celebrities promoted the company on social media. |
|
|
|
A MESSAGE FROM OUR SPONSOR |
|
|
|
When Phia officially launched last year, the company positioned itself as an affiliate-based product
recommendation app and browser extension that helped consumers find the lowest prices—or cheaper alternatives—for products like Dôen’s $400 lace-trimmed cotton dresses or Reformation’s $218 low-rise drawstring pants. Users installed the extension, browsed normally, and Phia surfaced better prices across the web. Phia took a cut of each transaction. By the time of the capital raise, the business had already established some product-market fit—Phia had surpassed 1 million users, most of them
through its browser extension. The number of active app users, I’m told, is lower. At the time, the company was generating around $300,000 a month in affiliate revenue.
Last week, however, Bloomberg reported that Phia had engaged in “cookie-stuffing,” a practice where its browser extension
allegedly replaced other affiliates’ tracking links with its own whenever users completed a purchase. The process thereby allowed Phia to claim commissions on sales it had not generated. The allegations echoed the controversy surrounding the PayPal-owned coupon app Honey, which faced a similar scandal in 2024 that resulted in a $5 million class action.
That suit is still pending.
A spokesperson for Phia told Bloomberg that the cookie-stuffing resulted from a code glitch that was introduced in a recent software release, which had since been resolved. Bloomberg retested the browser extension after the fix and confirmed it was no longer automatically replacing referral links. Some Phia insiders, however, argued that it was hard to fathom how the hands-on founders could have missed the error—even though, lineage aside, they’re both
basically kids. (A Phia rep did not respond to multiple requests for comment.) |
The controversy may indicate a deeper problem. Phia lists more than 700 brands on its platform, but
I’m told that some brands didn’t know they appeared there, while others explicitly declined the company’s offer to become official partners. That’s understandable. After all, Phia’s value proposition is showing consumers where to buy identical products for less—not something likely to thrill most brands. I’m also told that Phia’s aggressive pursuit of affiliate revenue put off some potential investors from participating in the Series A.
The alleged cookie-stuffing episode also raises
questions about the affiliate model in general. Can a shopping recommendation platform truly build a durable business on affiliate commissions alone? The model has only really been successful for creator-focused businesses such as ShopMy and LTK, which give influencers credit for the sales they drive while taking a cut on the backend for facilitating those transactions.
Whatever next steps Gates & Co. may have in store for Phia, the company probably needs to evolve its current revenue
model. A subscription tier could arguably work. Consumers could pay a monthly fee for access to software that sources the lowest prices or the closest alternatives to coveted items. Subscriber churn would be a problem, of course, but it’s more predictable than chasing affiliate credits from brands. Whether consumers would add another monthly charge alongside Netflix, Spotify, Amazon Prime, etcetera, is another question. |
|
|
|
None of that is helped by the turmoil inside the company. I’m told that nearly half of Phia’s full-time
employees have left since the beginning of the year, including the heads of product and technology. And I’ve heard that the departures stem from typical startup pressures—long hours and inexperienced but demanding leaders who struggle to delegate responsibility or trust employees to execute.
But at the end of the day, that sort of myopic insanity is precisely what their investors want at this stage. The Silicon Valley ecosystem rewards a handful of winners and leaves many more behind. Who
knows—maybe we’re approaching the next turn of the fashion tech cycle. Let’s hope Phia doesn’t become one of the first major casualties. |
Chanel’s confirmation that C.F.O. Philippe Blondiaux is retiring at the end of the year is
the least shocking news amid this week’s executive reshuffles. C.E.O. Leena Nair has been actively restructuring the org since her 2022 appointment. [BoF]
The luxury supply chain is too labyrinthine for a cut-and-dried labor exploitation investigation.
[Reuters]
Nike may have been ground zero for the Trump administration’s anti-D.E.I. crusade. [N.Y. Times]
The Victoria’s Secret Fashion Show is going
to L.A. The brand is really leaning back into sexy. [Instagram]
A new grocery store in West Hollywood is making a run at Erewhon. [Vanity Fair]
Liana Satenstein investigates the staying power of Chanel’s cap-toe ballet flat. [N.Y. Times]
Long live balloon pants? [Financial Times]
OpenAI wants to be ALD now. [X]
Telfar Clemens is a marketing genius and the industry’s best troll. [Instagram] |
Until tomorrow,
Lauren
P.S.: We use affiliate links because we are a business. We may make
a couple bucks off them. |
|
|
|
Puck fashion correspondent Lauren Sherman and a rotating cast of industry insiders take you deep behind the scenes of this
multitrillion-dollar biz, from creative director switcheroos to M&A drama, D.T.C. downfalls, and magazine mishaps. Fashion People is an extension of Line Sheet, Lauren’s private email for Puck, where she tracks what’s happening beyond the press releases in fashion, beauty, and media. New episodes publish every Tuesday and Friday. |
|
|
|
Puck’s daily art market email, anchored by industry expert Marion Maneker, offers unparalleled access to the mega-auctions and galleries,
elite buyers and sellers, and the power players who run this opaque world. |
|
|
|
Need help? Review our FAQ page or contact us for assistance. For brand partnerships, email ads@puck.news. You received this email because you
signed up to receive emails from Puck, or as part of your Puck account associated with {{customer.email}}. To stop receiving this newsletter and/or manage all your email preferences, click here. |
Puck is published by Heat Media LLC. 107 Greenwich St., New York, NY 10006 |
|
|
|
|
