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Inside a CEO's bold claims about her fintech startup| GuyWhoKnowsThings

As a Tunisian human rights activist in the 2000s, Amira Yahyaoui organized protests and blogged about government corruption. In interviews, described being beaten by police. When she was 18 years old, she sayingShe was kidnapped from the street, left on the border with Algeria and exiled for several years.

Yahyaoui's compelling experience helped her stand out among entrepreneurs when she moved in 2018 to San Francisco, where she founded a student aid startup called Mos. The app rose to the top of Apple's App Store and Yahyaoui raised $56 million from high-profile investors including Sequoia Capital, John Doerr and Steph Curry, according to PitchBook, which tracks startups. Mos was valued at $400 million.

In podcasts, television interviews and other media, Yahyaoui, 39, frequently spoke about Mos' success.

Among other things, she saying The startup helped 400,000 students obtain financial aid. But internal company data seen by The New York Times showed that as of early last year, only about 30,000 customers had paid for Mos' student aid services. The rest of the 400,000 users included anyone who had signed up for a free account and may have received an email about applying for student aid, two people familiar with the situation said.

After Mos expanded into online banking in September 2021, Ms. Yahyaoui told publications such as TechCrunch that the company had more than 100,000 bank accounts. But those accounts held very small amounts of money, according to internal data. Less than 10 percent of the Mos bank's roughly 153,000 users had deposited their own money into their accounts, the data showed.

Some employees tried to speak out about Ms. Yahyaoui's claims, said Emi Tabb, who worked at Mos in operations and held roles as head of financial aid before resigning at the end of 2022. But Ms. Yahyaoui fired and, at times, He belittled employees who tried to push back. Contrary to her public comments, said five people who witnessed the incidents.

“She created a culture of fear,” Mx said. Tabb said.

Mos is among a class of technology startups that emerged during the fast money era of the late 2010s and early pandemic, when young companies raised millions of dollars in funding with little more than promises. Now that the money has dried up and many tech startups are facing a recessioninvestors are more demanding, customers are more distrustful of bold claims, and employees are more distrustful of founders' pronouncements.

Last year, Mos laid off about half of its staff of around 50 people and closed its banking service. The company returned to its original business of helping students find financial aid and began emphasizing the use of artificial intelligence.

Ms Yahyaoui referred questions to a Mos spokeswoman, who declined to comment. When Ms Yahyaoui was asked about the number of Mos users last year, she responded aware on social media that female founders were often considered guilty while male founders were innocent.

“Perhaps today we should start applying the presumption of innocence to female founders as well,” he wrote.

This account by Mos was based on interviews with eight current and former employees, as well as internal communications, presentations and analysis. The internal documents last until 2023.

Ms. Yahyaoui grew up in Tunisia and later lived in exile in France. After moving to San Francisco, she raised money for Mos from investors such as Expa, the investment firm founded by Garrett Camp, one of the founders of Uber. Mos provided a service to help students find sources of financial aid, charging $149 for each school year.

Deena Shakir, an investor at Lux Capital, which backed Mos in 2020, said she and the firm's partners “deeply respect” Ms. Yahyaoui.

“We are proud to support companies and founders like Amira, whose commitment to enabling access for students gives us hope for the future of higher education,” said Ms. Shakir.

Mos got off to a slow start, three people with knowledge of the company said. Some students who signed up learned about aid they already knew about, such as a Cal Grant for California residents, they said.

An investor presentation seen by The Times showed Mos had monthly revenue of $340,000 in December 2019. The startup allowed users to pay $1 upfront and the remaining $148 when they received their financial aid.

In the end, Mos didn't raise most of that money. Seventy percent of users defaulted on payments after the pandemic hit in 2020, Jess Lee, a Sequoia investor who sits on Mos' board of directors, then he said in an article about the company posted on Sequoia's website.

At the end of 2022, about 6,500 of Mos' paying customers, or 22 percent, got refunds for its financial aid service, according to internal data. The company had told customers that if they did not receive five times the cost of Mos' services in financial assistance, they could get a refund.

mus saying could help students access $160 billion in scholarships, but that amount includes loans, three people familiar with the situation said. The company's argument was to help students avoid debt.

EM. Yahyaoui also saying students Those who used Mos “saved” an average of $16,000. That was the amount the startup determined they qualified for and not what the students received in aid, three people with knowledge of the company said.

Mos website includes a moving indicator of satisfied customers (“Jasmine got $12,237 for Cal Poly,” for example). Ms. Yahyaoui asked employees to use archival photographs and make up names, three people with knowledge of the company said.

In 2021, fintech was all the rage among investors. Ms Yahyaoui pressured Mos to become a bank, making its financial aid product free. That September, the startup announced its move into banking with a promotion that gave people $5 for signing up and another $5 for each referral.

Registrations poured in. Mos disabled the $5 promotion on its first day. Two months later, he turned it back on for three days and signed up more than 100,000 accounts, spending around $1 million on the promotion and sending Mos to the top of the App Store.

The registrations sparked interest from investors, including investment company Tiger Global. Sequoia's Ms. Lee wanted to see how many of the accounts that signed up during the promotion remained active before investing more, two people familiar with the situation said. Sequoia encouraged Yahyaoui to hire an outside company to evaluate whether the accounts belonged to real people, the people said.

Some employees were also concerned that many accounts did not belong to real people, three people familiar with the situation said. As the searches continued, Mos analyzed the accounts for potentially fraudulent behavior in an internal work document. In November, Yahyaoui restricted Lee's access to that document, two of the people said.

Shortly after, in February 2022, Tiger Global announced that it had led a $40 million financing for Mos. Sequoia joined the deal. It is unclear what impact access to the document would have had on Sequoia's decision to invest further in Mos. Two people familiar with the situation said Lee maintained access to a broader source of data about the accounts.

In a statement, Ms Lee said: “The most successful founders are those who have courage and are willing to test new hypotheses and adapt. “Amira is the embodiment of these qualities.”

Tiger Global declined to comment.

Along with the funding announcement, Sequoia published an article. on your website detailing Ms. Yahyaoui's dramatic past and business vision. She said less than 1 percent of Mos' bank accounts had been closed, “an unheard of statistic for a money-based registration promotion.”

Few people used the bank accounts, according to internal data seen by The Times. Of about 153,000 open accounts, 95 percent had less than $5 and a third had a zero balance through 2022, the data showed. Only 9.5 percent of account holders deposited money into their accounts during that time.

Mos told his board that 74 percent of bank account holders were students, according to a presentation seen by The Times. But only about 20 percent were 22 or younger, according to internal data, and about 45 percent were over 30. Mos's revenue from transaction fees, which made up the vast majority of the company's total revenue after becoming a bank, was less. of $70,000 during the first nine months of 2022, two people familiar with the financials said.

Ms. Yahyaoui sometimes berated her senior managers and threatened to fire them if their performance did not improve, according to five people who witnessed such events.

Using profanity, he wrote in a January 2022 message to employees that the company's mission didn't make sense “because of how bad we are at getting” things done.

“I need people I can count on to exceed my dreams, not lower them,” he wrote.

Ms. Yahyaoui's treatment of employees, including contract workers in Tunisia and Algeria, ran counter to her image as an activist, Mx said. Tabb said.

At an employee meeting in September 2022, a Mos employee asked Sequoia's Ms. Lee what her biggest concern was for the startup, three people who attended said. Ms Lee initially said she was surprised by how good morale there was given the circumstances, then added that it was unclear what Mos' product would be.

The startup was more of an “early stage,” or very early in its development, Ms. Lee said.

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