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As a Tunisian human rights activist in the 2000s, Amira Yahyaoui staged protests and blogged about government corruption. In interviews, she described being beaten by the police. When she was 18, she said, she was kidnapped from the street, dropped off at the Algerian border and placed in exile for several years.

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

In podcasts, TV interviews and other media, Ms. Yahyaoui, 39, frequently discussed Mos’s success.

Among other things, she said the start-up had helped 400,000 students get financial aid. But internal company data viewed by The New York Times showed that as of early last year, only about 30,000 customers had paid for Mos’s student aid services. The rest of the 400,000 users included anyone who had signed up for a free account and may have gotten 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 had very small amounts of money in them, according to the internal data. Less than 10 percent of Mos’s roughly 153,000 bank users had put their own money into their accounts, the data showed.

Some employees tried to speak up about Ms. Yahyaoui’s claims, said Emi Tabb, who worked at Mos in operations and had roles such as head of financial aid before resigning in late 2022. But Ms. Yahyaoui dismissed and sometimes disparaged employees who tried pushing back against her public comments, five people who witnessed the incidents said.

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

Mos is among a class of tech start-ups that rose during the fast money era of the late 2010s and early in the pandemic, when young companies landed millions of dollars in funding with little more than promises. Now as the money has dried up and many tech start-ups grapple with a downturn, investors are pickier, customers are warier of bold claims and employees are more suspicious of founder pronouncements.

Last year, Mos laid off approximately half its staff of around 50 and shut down its banking service. The company reverted to its original business of helping students find financial aid and began emphasizing its use of artificial intelligence.

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

“Maybe today we should start applying presumption of innocence to also female founders,” she wrote.

This account of Mos was based on interviews with eight current and former employees, as well as internal communications, presentations and analytics. The internal documents go up to 2023.

Ms. Yahyaoui grew up in Tunisia and then lived in exile in France. After moving to San Francisco, she raised money for Mos from investors including Expa, the investment firm started by Garrett Camp, a founder 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 take pride in supporting companies and founders like Amira whose commitment to enabling access for students gives us hope for the future of higher education,” Ms. Shakir said.

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

An investor presentation viewed by The Times showed that Mos had monthly revenue of $340,000 in December 2019. The start-up allowed users to pay $1 upfront and the remaining $148 when they got their financial aid.

Mos ultimately did not collect most of that money. Seventy percent of users defaulted on their payments after the pandemic hit in 2020, Jess Lee, an investor at Sequoia who sits on Mos’s board, later said in an article about the company published on Sequoia’s website.

As of late 2022, roughly 6,500 of Mos’s paying customers, or 22 percent, got refunds for its financial aid service, according to internal data. The company had told customers that if they didn’t get five times the cost of Mos’s services in financial aid, they could get a refund.

Mos said it could help students access $160 billion in scholarships, but that amount included loans, three people familiar with the situation said. The company’s pitch was to help students avoid debt.

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

Mos’s website includes a moving ticker of happy customers (“Jasmine got $12,237 for Cal Poly,” for example). Ms. Yahyaoui asked employees to use stock photos and to make up names, three people with knowledge of the company said.

By 2021, financial technology was hot with investors. Ms. Yahyaoui pushed Mos to become a bank, making its financial aid product free. That September, the start-up announced its move into banking with a promotion that gave people $5 to sign up and another $5 for every referral.

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

The sign-ups piqued investor interest, including from the investment firm 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 Ms. Yahyaoui to hire an outside firm to assess whether the accounts belonged to real people, the people said.

Some employees also had concerns that many accounts did not belong to real people, three people familiar with the situation said. As sign-ups continued, Mos analyzed the accounts for potentially fraudulent behavior in an internal working document. In November, Ms. Yahyaoui restricted Ms. Lee’s access to that document, two of the people said.

Soon after, in February 2022, Tiger Global announced it led a $40 million funding for Mos. Sequoia joined the deal. It is not clear what impact access to the document would have had on Sequoia’s decision to invest more in Mos. Two people familiar with the situation said Ms. Lee retained access to a broader data source regarding the accounts.

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

Tiger Global declined to comment.

Alongside the funding announcement, Sequoia published an article on its website detailing Ms. Yahyaoui’s dramatic past and entrepreneurial vision. It said fewer than 1 percent of Mos’s bank accounts had been closed, “an unheard-of statistic for a money-based sign-up promotion.”

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

Mos told its board that 74 percent of bank account holders were students, according to a presentation viewed by The Times. But only around 20 percent were 22 or younger, according to internal data, with about 45 percent over the age of 30. Mos’s revenue from transaction fees, which made up the vast majority of the company’s total income after it became a bank, was less than $70,000 for the first nine months of 2022, two people familiar with the finances said.

Ms. Yahyaoui sometimes berated her top managers and threatened to fire them if their performance didn’t improve, according to five people who witnessed such events.

Using expletives, she wrote in a January 2022 message to employees that the company’s mission was meaningless “because of how bad we are at getting” stuff done.

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

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

At an employee gathering in September 2022, a Mos employee asked Sequoia’s Ms. Lee about her biggest concern for the start-up, three people who attended said. Ms. Lee initially said she was surprised by how good morale was given the circumstances, then added that it wasn’t clear what Mos’s product would be.

The start-up was at more of a “seed stage,” or very early in its development, Ms. Lee said.




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#C.E.O.s #Bold #Claims #Hot #Fintech #StartUp

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