Selena Gomez’s mom, Mandy Teefey, told employees recently that she took out a loan against her home to keep Wondermind, the mental health company she cofounded with her popstar daughter, afloat after twice missing payroll in recent weeks.
By Jemima McEvoy, Forbes Staff
Wondermind, a mental health startup cofounded by singer, actor and business mogul Selena Gomez, is in the midst of a crisis after apparently running out of cash and failing to pay its employees, vendors and freelancers starting in late March.
For now, the Los Angeles-based company, which employs around 15 people to publish articles, interviews and podcasts about mental health topics, is being kept afloat by Gomez’s mom and Wondermind’s CEO Mandy Teefey, who told employees on Thursday that she took out a loan against her home to pay back its outstanding debts. Employees have been repaid for one missing paycheck but are still waiting on another, while freelancers and vendors are owed tens of thousands (if not hundreds of thousands) of dollars.
A Wondermind spokesperson says the company has “rectified” the situation and that everyone who is owed money will receive it on Monday. “Like many startups, Wondermind has been working through its own set of growing pains,” the spokesperson told Forbes in a written statement, adding that “in the coming days we will be transitioning into a new chapter for Wondermind, and continuing our important work in mental fitness that helps hundreds of thousands of people.” Teefey declined to comment for this article while a representative for Gomez did not respond to Forbes’ request for comment.
Gomez, 32, is one of America’s richest self-made entrepreneurs, worth an estimated $700 million. Her fortune is largely tied up in her Rare Beauty makeup line, which she started in 2020 and had nearly $370 million in revenue in 2023. She launched Wondermind in 2021 with her mom and Daniella Pierson, the founder and CEO of women’s newsletter The Newsette. Inspired by the founders’ own individual mental health struggles, Pierson previously described the site to Forbes as a “a sexier, more entertaining competitor to” sites like Psychology Today and WebMD.
“It honestly stemmed from a conversation we both had with each other and it was about our journeys and we ended up relating a lot to each other and it was a turning point,” Gomez said during a panel she and Teefey did about Wondermind last March at the Austin-based conference SXSW. She said this prompted them to question: “How can we do that for other people?”
In 2022, a year after its launch, Wondermind raised $5 million at a $100 million valuation in a Series A funding round led by Serena Williams’ Serena Ventures, with participation from Sequoia Capital, Lightspeed Ventures and the family office of real estate billionaire Barry Sternlicht.
Despite the initial hype (and its now wealthy celebrity cofounder), Wondermind seems to be in dire financial straits, according to recordings and emails obtained by Forbes, as well as interviews with three current Wondermind employees, all of whom spoke on the condition of anonymity for fear of retribution. In addition to money owed to staff members, two of these employees say the company owes $60,000 to a PR firm it previously worked with. One said Wondermind owes tens of thousands of dollars to freelance writers, some of whom haven’t been paid in over three months.
Two current employees say problems began in January 2023. That’s when Teefey became sole CEO. Pierson had been running the company with her as co-CEO but exited that same month. It’s unclear why. Both she and the company declined to comment on her departure. Either way, that’s when Teefey, who had reportedly managed Gomez’ career for many years, took the reins alone. According to her LinkedIn profile, Teefey was president of July Moon Productions, the manager of Gomez’ film, TV and music endorsements, until 2014, after which she was CEO of Kicked To The Curb Productions, which produced the 2017 Netflix series “13 Reasons Why.” (Gomez was an executive producer of the show.)
These two employees argue Teefey did not have the operational knowledge to make the brand succeed. According to these employees, Teefey turned down crucial brand deals if they wanted her daughter to be involved, including a multi-million dollar deal with Airbnb, which they say contributed to the company’s financial problems.
Teefey’s chief of staff, Emma Wright, described the employees’ characterization of the failed Airbnb deal as “insanely, grossly misleading” but declined to give additional details. “People who might have that opinion might not know what happens behind the scenes of negotiations,” she said.
Wright also disagrees with the criticisms of Teefey’s leadership. “I’ve just seen someone who has led with just pure grace,” she says of Teefey. “She has been singularly focused on keeping everyone’s livelihoods intact and keeping the company growing.”
Gomez, for her part, does not have an active role at Wondermind. She’s listed as the chief impact officer on the company’s website. “We have to fight with her agent to get her to do anything for us and she rarely does. And by ‘do anything’ I mean post something on Instagram or interview her for an article so it does good traffic,” one Wondermind employee told Forbes, noting that Gomez met with the staff only once in three years. A company spokesperson insists this is “absolutely not true” and argues Gomez’s involvement “speaks for itself.”
Though they may have been bubbling beforehand, the issues at Wondermind surfaced on March 31 when employees didn’t receive a paycheck for the second half of the month. Later that day, Teefey sent an email to the staff with the subject line “Important Update,” informing them that their healthcare provider Sequoia (not to be confused with the venture capital firm, which became an investor in Wondermind in 2022) had terminated employees’ benefits including health, dental and vision insurance two weeks prior on March 15, according to a copy of the email reviewed by Forbes.
“We apologize for the email on a wellness day,” Teefey started, going on to blame the troubles on a delayed payment from an investor. “As you are aware, we have been working tirelessly to secure our next round of funding,” she said. “An investor who was lined up to provide some critical bridge funding last week was not able to execute their transfer on time,” Teefey continued, characterizing the Series B closing as imminent: “While we have almost $8M committed to our series B and the bridge capital investor still working to send in funds, we find ourselves in a situation we have worked hard to avoid,” she wrote in the email. (No Series B has been announced.)
Also in the email, employees were told they would have to elect into COBRA coverage. COBRA is a federal law that allows for people in certain situations to temporarily continue their health plans – this applies to those who experience “qualifying events” like if they’re terminated from their job for a reason that isn’t gross misconduct or their work hours are reduced. The employees, who weren’t told of any change to their working schedules in the email, were informed they would need to cover the company’s portion of premiums on the medical plan in addition to their own, but would be reimbursed “after we raise our round.”
The next day at an all-hands meeting, a recording of which was shared with Forbes, Teefey sought to quell employee concerns, blaming the payroll and healthcare disruptions on a “hiccup that happened in legal” that would soon be resolved. She did not name the investor apparently in the process of sending over funds but said she would’ve covered the missing payments herself if she could.
After one employee raised concerns about the small size of the $8 million Series B investment round referenced in Teefey’s email, the CEO suggested the round would ultimately be between $20 million and $30 million. She said the plan was to close the round as soon as possible “so we can take care of all debts, all vendors, all individuals, anybody we owe money for we want to cover A.S.A.P. and take care of and get out of that so we can move forward,” Teefey said on the April 1 call, describing the startup’s next steps of launching an app, reaching profitability “and grow from there.”
Another employee on the call asked if she should continue to hire freelancers despite complaints piling up about late payments for past projects. “I’m a bit concerned about when I send out assignments, I don’t know if they’re going to be…,” the employee started. “… compensated or not,” Teefey jumped in, advising the employee to “be conservative” over the next few days but not to cease all new projects.
But three days later on April 4 in another all-hands meeting, Teefey had changed her tune. The call started with COO Bhavik Trivedi, the former vice president of operations at luggage company Away, assuring employees that money was “in the pipes” and would arrive that day or early the next week. Teefey then announced the company had secured enough funding to pay them through the end of the month, but said they should put all projects on hold. “I would just say we’re not spending a dollar on Mental Health Awareness Month,” said Teefey, referring to the month of May. She noted that the company had not been “operating on strict budgets” in the past and had struggled to secure Series B funding as potential investors critiqued the company for having “vanity metrics” and no proof that “we were holding onto a consumer.”
Employees were paid for the second half of March and first half of April, through two wire transfers , and were repaid for at least part of the company’s portion of its health insurance payments, according to two current employees. However, Wondermind missed payroll again on April 30 – and employees haven’t been paid since.
The latest update came on Thursday afternoon when Teefey called yet another all-hands meeting, announcing she had taken out a loan against her home and that the company was in the process of paying back all its outstanding debts to employees, vendors and freelancers. She said payments would be received on Friday and the cash would be able to sustain the company through the end of the month. Beyond that, she pointed to the Series B. “We’re still negotiating,” she said.
But on Friday, Trivedi, the company’s COO, posted a message in Slack saying that though money was received for payroll, it arrived “just after the same day wire cutoff” and will thus reach employees’ bank accounts at midday on Monday.
This has left employees worrying about whether there will be yet another delay – and if the company will be able to survive. “Even if this loan does come through, based on the debt and what everyone is owed, maybe everyone will be paid off… But then what? ” says one person.
“For what it’s worth, I think Mandy believes in this company to a fault,” adds another. “She means well. Still there have been so many promises unkept. A new, big opportunity is always on the horizon but never comes. I’m sad to see things go this way.”
As for its celebrity association, the employee added that until recently, they “felt secure” knowing Gomez was a cofounder of the brand, “But it seems like her involvement is minimal to non-existent at this point, or we probably wouldn’t be here, right?”
This article was originally published on forbes.com and all figures are in USD.
Look back on the week that was with hand-picked articles from Australia and around the world. Sign up to the Forbes Australia newsletter here or become a member here.
