Phia Allegations, $15B TikTok Shop Reality Check & Creator IP

0:00This episode of Female Founder World is presented by Omnisend. Hey, this is besties. Welcome back to Female Founder World. I'm Jasmine. I'm the host of this show and the person behind all things Female Founder World. Hi, guys. I'm Natalie, a team member at Female Founder World, and I'm also a founder myself of Beach Street Swim. Hi, and I'm Paige. I'm the co-founder of Benny and a contributor here at Female Founder World. The first story that we need to talk about is obviously the fear tech scandal. This is the number one story that is dominating my feed right now, particularly if you are in fashion startups, a female founder, like this is your algorithm right now.

0:37I want to give you the backstory if you don't quite understand exactly what happened. So essentially Fiat is a fashion shopping app that is founded by Phoebe Gates, who is yes, Bill Gates' daughter and Sophia Kiani. They basically work on an affiliate model where if they refer a sale, they get a portion of the sale proceeds or they get a commission from that sale. And there are a lot of folks in the space who work like that. A lot of your favorite creators, influencers work like that, ShopMy, like a lot of the platforms do this kind of thing. They came out of the gates really strong. They raised$35 million in a series A at a$185 million valuation.

1:18They had all of the famous people on their cap table. It was basically, they basically dropped their cap table looking like the headliners for a festival in this very grabby graphic on Instagram. They've got Sarah Blakely, Kris Jenner, just all of the people. What's actually happened? There's been a very well-reported Bloomberg story that has gone viral. And what Bloomberg is alleging, what they have found through external researchers and also internally as well, is that when they check out using a platform that is not fear, if you have fear downloaded in your browser, it is basically kind of like going in a little sneakily in the back and popping in a fear code or taking credit for that sale, even if they didn't actually generate that click.

2:10And that is a massive no-no in affiliate marketing and affiliate marketing. You kind of need to be the person that drives that last click to be able to take credit for the sale. And so that means that a lot of people who, a lot of businesses and folks who should really get the credit for taking their sales should be getting that commission haven't been, and it's been paid out to FIA instead. FIA has responded via a spokesperson. We haven't heard from Phoebe. We haven't heard from Sophia, the other co-founder about this, but a spokesperson did say that they, as soon as this was brought to their attention, it's been removed.

2:43And Bloomberg agreed that yes, as soon as they flagged this, it was removed this is obviously massive news and i'm very keen for both of your thoughts on this it puts like a pit in my stomach like ah i don't want to believe it and it really makes me so sad whether or not there were like malintent there it just is such a bummer story and like a bummer for female founders gen z founders like it's already such an uphill battle that it sucks to have a card kind of dealt against and yeah nat i'm sure you've got some more eloquent thoughts than i do i also my first thought was oh oh like this is such a bummer because their cap table obviously is extremely impressive they have something that a lot of other founders don't have which is that ability to just crush with content they're so gifted at being forward-facing their collaborations with other brands and businesses which we've discussed before have just been so intentional and organically great in my opinion.

3:46So it's kind of a shame that the priorities may have been on that rather than the product itself, which I'm just assuming. I don't really know what their day-to-day looks like. Whether or not it was intentional, I do think that this is going to be a big inflection point for them and their business and also similar affiliate marketing and affiliate channels because as a creator, when it comes to something like ShopMy, I've visually seen people shop for my link and then not see that commission come through. I'm not doing enough commission to like fight it or do anything about it. But I imagine if I did, I would feel differently.

4:22And it's just like, again, a bummer. It's like a shame. And unfortunately, I'm not super surprised by this. I'm earring on the side of that. This was obviously a mistake. But what else could be happening if this is like a pattern? because this is like the second time we've seen a controversy here. I really don't know whether this is a story of trying to grow too quickly and some level of incompetence on the team or if it is something more intentional and sinister. I'm not in a position to weigh in on that. I was very surprised to see this because I know that one – I think it's Honey's president is one of the advisors to fear and Honey went through a scandal like this many years after it was acquired by PayPal.

5:09So, you know, not while it was being founder led where they were doing, they were doing the same thing. They had to pay out a lot of money, I think. And so really, it really surprises me that after there was already this pretty big scandal in this space using exactly the same thing that newcomers would not learn from that mistake as they were entering the space. And so I don't know, it surprised me that this actually happened, to be honest. And I don't know if it's incompetence, a mistake, or if it was intentional. I saw this TikTok regarding this on my feed today and it was from Madeline, the founder of Nail Atelier.

5:49And she's part of our community and she had kind of a hot take about this that people were engaging with a lot and had some healthy debate in the comments, I'd say. And she was saying that she has communicated with the FIA team on the brand side and just felt like from the beginning of their communication, they maybe weren't necessarily as focused on like the success of her brand and her affiliate overall, but more so on like their business. And when she would ask for like benefits or help or support, it just seemed like the focus was on their business, which that's showbiz, you know, like they're also trying to have a business of their own.

6:24I think that again, this just comes with an inflection point of like they need to be better improve in that area if that's what people are thinking. But I thought that was interesting. And you can check that out on her TikTok as well. I do think this is the time where like now everyone comes out of the woodwork with like every negative interaction that they've ever had with the brand, with any of the founders, with any on the team. And it's just like, this is what happens now when I actually, that's the bit that I roll on. I'm all for like, let's talk about the news. Let's dissect what this means for this space.

6:50Let's dissect what this means for competitors. But then when we get into like everyone sharing every negative reaction, I'm kind of like, and this isn't necessarily at that post specifically. I saw a lot of this on the weekend. But I'm like, guys, do you really need the views? Like, can we just, I don't know, like, does everyone now have to come out with every, because it does feel a little bit like the villagers stomping in with torches kind of thing where I'm like, I just don't know how this is helpful to the ecosystem and to female founders in general. And I don't want to be someone who participates in that personally.

7:23Well said. It feels like we're at like a second and this, this is a total trajectory and maybe a whole podcast of itself but it feels like we're almost at a second girl boss takedown era right now I don't know if you guys have been seeing all of the like Emma Greedy whatever like there's like a buzzy like thing that people have been saying on TikTok and like everyone is trying to be this girl boss and it's just like what can we just let women win like let's let women win okay I felt the same I was like okay and so what seriously I would do it like not not fraud or bad things but we like I would love to have my last name be something that really means something.

8:03You know what I mean? We'd all be taking those deals if we could. Look, we're going to find out exactly what happened, I think, over time. And it'll be interesting to see whether people continue to use the app or if they switch to things like OneLocker or other competitors in the space. But we'll just have to wait and see. The big news in the creative space that I also wanted to bring to the chat today, guys, is this CAA news. This massive talent agency. And for decades, they've been running with the typical like talent agency model, which is you rep talent and you get a commission from like the deals that you bring in for them.

8:36But now they are so all in on the creator economy. And they think that this is such a big space and the space is blowing up that they have, they're trying to find a way that they can like own creators IP. and the reason why I wanted to talk about this is because it just marks such a shift in the creator space and the way that brands are going to be working with creators and I just thought that we had to talk about it. No it fascinates me I'm like so into all of this Jasmine I feel like what to me is like very exciting is we've talked about this like equity model for brands working with creators and how that's a bit broken to how talent wants to work with creators because you're incentivized to just get your commission.

9:20And with equity, you're not really getting a commission. I'm curious if this is really going to change tides on creators wanting to work with brands because the talent is now incentivized. I know I'm like making this a bit confusing, but like the triangle makes sense instead of this line. That didn't make sense. I know CAA. So I was actually literally just at coffee with CAA like right before we started recording. I was trying to get the tea on this. The girl I was chatting with didn't know much about this. But she does know CAA, and I think it's actually a part of this integrated media company that's like spinning this off, invest in brands already.

9:55So I am like on the edge of my seat to see what's going to come out of this because it's all going to tie together. Yeah, because it's basically like they've launched this roll-up venture. They're putting 200 – well, you know, with partners, putting$250 million into this venture that is essentially going to let them acquire companies that operate in the creator economy. I just thought that was so interesting. I think this all ties back to the creator equity conversation that we had a few weeks ago and Paige, you touched on this. I feel like we've watched creators over the past couple of years, especially in the past two years, I feel, go from literally zero to millions so quickly and their brands doing the same.

10:35And I think it was only a matter of time until agencies picked up on this and realized like they may have an opportunity with the creator, but they're missing out on everything pertaining to their brand and their IP. especially. So I am really intrigued to see where this goes. I think as more creators turn into founders, it will be more norm in the next like five to 10 years. Same thing with like the creator equity model. But I think it's just that turning point where we're seeing these creator brands start to need institutional funding and like that extra support. So I don't know. Because obviously these, you know, these institutions, they're trying to like roll up media brands that are creator-led in the same way that they would, you know, private equity would roll up like dental practices or I don't know, like other small independent businesses.

11:23And then they bring them all together and they share, you know, horizontal resources across all of the businesses. That's what, you know, and reduced cost, blah, blah, blah. That's what private equity does. But it's kind of like, what's the difference between being a creator and being a creator who's built a media company? Like, is it the fact that they have recurring shows and IP? is it like the the strength of their brand because there are some people that i think we would follow and watch and immediately think of that person as a like you know str like creator and me building a media brand versus folks who just like post on the internet i don't think that this is gonna work for everyone no that's what i'm trying to think about i'm like where i i get it for brands exciting i get it for ca exciting but it's like such a specific creator that this is really exciting for i'm curious like this is maybe a dumb question guys no dumb questions this is similar ish to unwell and like they're kind of like right what they've done with creators and they're kind of like incubating everything out of unwell like we saw you know alex earl and madeline argued like very early is this not is this similar ish do we think i don't think it's the same i think it's more like they're actually investing in and owning whereas unwell is launching new media products based on people that already have audiences.

12:41So in the same way that Dear Media, their model is they'll find people who already have distribution and they will launch the media product with them. So they'll launch the podcast or the show. And I think that that obviously worked for Dear Media because all of those folks were bringing, they were people that had like a clear point of view. They felt like brand aligned with the broader media company. And then they were already bringing their own like distribution. But I feel like this is a different thing where they're trying to like take a stake in equity in existing creators and their media businesses.

13:13When I was thinking about this, my mind went to Charli D 'Amelio. And when her family did that TV show, I don't even remember what it was called. Something with the D 'Amelio. The D 'Amelio, yeah. Was it just the D 'Amelio? I don't know. Maybe, yeah. That was an example of something where she was such a star at the time. And I just don't think a reality show with her family was quite the right fit or like what people really wanted to see. And that and recently we saw that wishbone kitchen is doing a netflix show and i think like that is just the epitome of a perfect project that she's she's just so good for that it's something people want to see it's like bringing back the the traditional cooking show with the flair she has a great personality and i think that's like you know the perfect match i hope that caa doesn't push talent to do things that may not be a right fit.

14:06And I'm curious to see if they're going to now prioritize creators who have the potential to have a, uh, like a show like that, or, um, have like a very clear, specific, different point of view so they can capitalize on that. It is interesting watching Netflix get into the podcast and this like show, creator-led show space. And I'm curious about like what the next iteration of that is. We saw like Jay Shetty has his podcast On Purpose. That was on YouTube. They have like a billion plus listens and they left YouTube in a hundred million dollar Netflix, Spotify exclusive. And these platforms are just like fighting for that top talent.

14:49I'm curious about, okay, so we see right now that podcasts follow a very specific format, right? It's an interview format. It's this kind of format, whether it's in person or, you know, like virtual like this. But if Netflix and these video platforms are acquiring these creator shows, like think a little bit about differently about, okay, what other shows can people create that you would also watch on Netflix if they are trying to be like Spotify, like YouTube? Like that's what I'm thinking about as someone who creates long content on the internet of like, what else could this be? And to be able to partner with someone like Netflix, it just doesn't follow this like same podcast format that everyone's doing.

15:32It's interesting, like how these institutions, these entertainment institutions are just really all in on creators at the moment, like Shark Tank, they just released their new sharks and who's going to be on the show. We've got Mr. Beast, Stephen Bartlett from Diary of a CEO and and Flat Story joining as a guest, like they're all in on it as well. So this isn't going away. Yeah. Paige and I were talking about this earlier. And when I saw this lineup last week, I was so excited about Erin and Sarah Foster. Are you guys familiar with them? Yes. Yeah. Oh my gosh. I want them to come to Sarah. That, oh, I love them.

16:09And not only are they so successful with their business on the founder front, but they're amazing creatives and producers. And I just think that they'll add so much to the show. Whereas like, can I be real? I don't know that Mr. Beast is like my dream Shark Tank guest because I already know of him. He's so successful. I'm not discounting him at all, but I want to learn and listen to people that maybe I'm not so familiar with or who are maybe quietly building or maybe have had quiet success and may not be forward facing. but you know then there's less for people to capitalize on if they own their IPs so I don't know totally and I think when these like big entertainment institutions are trying to find a way to capitalize on acquire IP from these creators it's because they want their audiences and that inbuilt distribution and trust and so they want the folks like Mr Beast and it's also interesting as they've like kind of picked from like different niches like I think if you know like there's there's like the venn diagram right like we're in the middle and we know all those people because we're like chronically online in this space but i think a lot of people would know who the foster sisters are but they wouldn't know who stephen bartlett is and so i do think like it's interesting watching them like pick and be like okay we're trying to build like a mass a show with mass appeal but we're going to bring in all of these like neat niche i say you know billions of views but niche creators or like niche audiences to build that out anyway wait and see interesting space so much happening in the creator economy not something we normally like talk on but i just thought that that was like a really big shift from one of the big like institutions in this space yeah i think on cpg land when you mention ip jasmine my mind just goes to i know like three years ago like a target still are but we're so excited about like ip and there are like brands are like i'm gonna like get the smurfs ip for the next three years and do a smurfs whatever and i think we've seen that like playo playo like it's a bit we've seen it right like barbie everything but like what is what are we going to be doing to capitalize on this you know like how are we using like you saw a few years or last summer if you guys saw jake shane did this like popsicle where it was like his face on a popsicle like it was literally the same as like a smurfs collab just the ip of it all is is fascinating and how we can partner I need to talk very quickly about this post that I saw from a creator called Camille Moore, and she has a creative agency called, I think, Third Eye Creative.

18:39And she shared that, you know, digging into the TikTok shop numbers a little bit. I think if you're someone who's on TikTok shop and you think it's not quite working for you, these numbers might help validate some of what you're experiencing. So TikTok shop pulled in over$15 billion dollars in US sales last year. So that's up 68 % year on year. And when you see that headline, you think, okay, amazing. Like TikTok shop is where it's at, but they found that more than half of the registered sellers storefronts on TikTok shops are the people that like literally sell their own product, not just like the affiliates.

19:15They recorded zero sales last year. So only 2000 stores on TikTok shop cleared a million dollars. And that's about a quarter of 1 % of the platform. What we're actually seeing on TikTok shop is that most of the volume of sales are coming from such a small percentage of stores and the vast majority of people that are trying to sell on TikTok shop are really not making that much money. And I just think that's fascinating. Like, why is that happening? I have an observation. This doesn't have any sources. This is just what I've noticed over the years on TikTok. We love going on vibes. Give me your vibes.

19:52Yeah, no. And I actually think this is going to be really helpful to some people who have felt discouraged with TikTok shop. And I'm curious for anyone who's had success, maybe we can like check with them on how they feel about this. But I feel as though the brands that are having massive success on TikTok shop, like the Tarts, the Metacubes, they are crushing it because they are selling a product with like a magic result. And I say that with my hand quotes because the visuals that I'm seeing on TikTok shop are like a wrinkle bomb and the wrinkles going away and under eyes just becoming so bright.

20:24And it's not like, oh, this is the best brand ever. And it's a great brand pattern. It's like a great visual pattern. So I feel as though if your product isn't delivering a quick result really fast and you're not seeing that visual proof, you may not have that instant success. I'm wondering if you guys now go on TikTok and scroll through and you see the TikTok shop videos that are doing really well you'll notice they all have this in common and they'll have like a demo within five seconds I've also noticed a comparison so like it's almost like there's this war on TikTok between like Metacube and what was the other one that Paige you shared Dr.

21:05Millexin they both have a stick product and they both are selling like a wrinkle bomb of some sort and people are comparing the two so again like they're at the very top of that pyramid that jasmine touched on and the visuals are really stark whether or not they're real i don't know i would have to try it out myself but i think that is what is contributing to these like impulsive purchases because it's also stemming from an insecurity like if you have dark under eyes and you see this video like you might just try it because you're like oh it's so cheap on tiktok shop i'll try it yeah i also think that i also think that like i'd be very curious to see how much these brands are spending on paid with tiktok that's where my mind goes like have you guys noticed that a lot of the really uh successful tiktok shop videos are not from like massive creators oh that's interesting no yeah i find that they're just average people who are not you would think oh they're trustworthy because they have no skin in the game because they're not yeah massive influencers and like the lo-fi content yeah i find it actually opposite it's almost like a cycle like reverse psychology because they are not getting paid like a flat fee to post, but they're making commission.

22:22So they're like being more salesy because the money that they're trying to make is only coming from commission, which I find really interesting. Not to say that large creators don't post about TikTok shop. They do too. I think that also like the split in the way that a dollar is kind of split out if you're a brand that's selling on TikTok shop is really interesting. And I think the economics there probably also favor bigger brands who have more buffer. So TikTok takes a 6 % referral fee on every single order. Then there are creator commissions if you've worked with creators. So like that could be maybe 15 to 30 % for like a beauty brand, for example, which is kind of on the higher end.

23:02And now sellers are using TikTok's own fulfillment. And that could be like a few dollars per unit that you're shipping. and then you've already got 30 % of your retail price gone before you think about any ad spend, discounting, anything else that's going into the product. So I think that that also is a model that works for like a certain kind of brand, but not all of them. I've also noticed that sometimes the products aren't actually from the right seller. Have you guys noticed that? Like they'll be a fake product. So I actually wonder how much of these sales have been lost because of that you similar to how amazon will sell products that are supposed to be you know from a specific brand but then when you go to the selling page it's not the brand oh what it's like so like people reselling yes yes i have noticed that i'm not a big like to talk shop gal but like it's horrible on amazon and there's nothing we can do do you guys use do you use tiktok shop page we don't i want to but then we have these convos and i'm like ah it's so it's not even in canada that's why i'm like when you scroll through tiktok shop i'm like it's not in australia right yeah i've seen it um but i just don't really like for you no like okay so with some cost no bloom you would i would think so energy drinks honestly really do well on amazon and apparently on tiktok shop bloom um does so so well if you know bloom energy drinks yeah they're very creator yeah they're huge on TikTok shops.

24:33So there's opportunity there. Yeah, really big. But I'm curious, like of that list, like I wish we could see of the, you know, what did we say? Millions, you know, of TikTok shop merchants that didn't have any sales. I'm wondering who's all active. Like I almost and maybe this is my delusional self. I hear that as like, great, there's opportunity. Like there's people that are like starting, but not really like completing the task. Like I almost read that as like dead accounts yeah they've like thought let's do tiktok shop and then they've not gone through the process of actually probably setting it up i think there's probably a lot of that for sure i agree i did think that as well um also interesting that alter now is um they are setting up their like tiktok shop storefront as well which i think is quite interesting as like a multi-brand retailer i would not want to be going head to head with alter on tiktok shop and especially if you're thinking like hey i'm like a founder-led brand tiktok is our like d2c channel and then your retailer comes in and like i'm curious about what the expectations are going to be for these brands to support their retailers on tiktok shop oh my gosh you know because like you already have to if you go with ultra or sephora or whole foods spend so much money marketing through their own channels and i do wonder whether now there's going to also be this push for um independent brands to support the retailers as they are building out their TikTok shops or friends as well.

25:59It's an interesting one. You know, I am all about making those smart swaps in your business that reduce friction and reduce your costs. Right now, the smartest swap you can make is moving to OmniSend. OmniSend is this email and SMS marketing platform that is super, super easy to use. And they've just dropped their SMS pricing. So you can now send a marketing SMS for a fraction of a cent. It's literally seven tenths of a cent to send a marketing SMS with OmniSend. Plus they will migrate you onto the platform from whatever email and SMS marketing tool you're using right now for free within five days when you sign up to a paid plan.

26:34We have a special offer for our Female Founder World community. If you use the code FFW35, you will get 35 % off trying out OmniSend. You can head to the link in the show notes or just go to OmniSend.com and check out the platform for yourself. Okay, guys, let's get into our smart swaps of the week. If you're new here, smart swaps are just the things that we're doing to upgrade in life and business. I have a quick one for you today that I've been trying out and it's a tool called Victor AI. I heard about it on another podcast and it is basically an AI assistant that is in Teams and Slack. And that's something that I've been having a bit of an issue with, with like Claude and trying to figure out how to like gather the conversations that we're having in Slack, because that's the communication tool that we use and turn that into actionable, useful stuff.

27:20And that is exactly where Victor AI lives. So useful one, if anyone is looking for an assistant in Slack, that's one that you should go and check out. Who wants to go next with their swap? I'm happy to. Jasmine, you always make me feel like a real like analog hokey with my smarts. This is like analog as heck. Like this is like back to what I used to do during when I was in university and I was so busy and like doing all the things. And I think when we launched Benny, I was doing this, but I am back to you guys calendar blocking literally sounds so basic, but start of a quarter, I always like to really like get really clear on my like systems and what's working and what's not.

28:01And my own just like schedule, I think over the last year has become something I'm not happy with. So blocked out my entire kind of quarter of like to do is aligned with every week. And I just I used to do this. I back to it. It's like the greatest thing and just so freeing but every like half hour is blocked in my day of you know exactly what I'm wanting to do and it's like my to-do list blocked into my calendar I'm sure Jasmine you're like okay try adding two children I aspire to be you honestly no no no that's all I've got is me and and you know this computer like it's us against the world like well we've got this but I'm sure with more commitments in my life that'll be more difficult um but I'm like locking and loading i wake up and i know exactly what to do if you guys are like struggling block out your massive to-do list on your calendar love it yeah i love that idea of like pick the end of month goal or whatever and then like calendar block yeah way back yeah it's the best okay mine is simple but it's a little luxury that i love in my life in the past i never really invested in like any kind of nice pajamas and you know I would like up for like a little t-shirt or whatever and a friend of mine got me a skim set of pajamas oh my god you guys they are so cozy but not only are they like just they just feel so great and they just make my whole like bedtime routine better and I'm like a huge luxe pajama set person um because I used to just get like cute ones on amazon and call it a day but no no no no this has changed everything and it has helped me define my day versus my night so like once the pajamas are on it's like okay the phone is bricked we're doing yes that the other thing and when i wake up and i get dressed for the day like it's work time so i don't know little things like that can really get you out of a slump and um especially skims they just they're so comfy i love a nighttime routine okay i'm finding new pajamas i love that one thank you guys and if you are following along just remember that we're about to kick off week three of the challenge make sure that you've listened to watch actually watched because it is a tutorial week two of the challenge where we go through what to post this week is a short video and it's super tactical um and so i want to make sure that everyone is caught up to to that i'm already seeing some people dming me their videos which has been amazing uh if you haven't send it to us in the female founder world dms or in our group chat because we're going to like engage and and make sure that you guys get the love that you deserve on your post.

30:33Okay, bye guys. See you next week. Thanks everyone. Bye.