Getting Her Fix
How Stitch Fix Founder Katrina Lake Took Her Brand from Start-up to Success and Built a $2 Billion Dollar Empire
Though embroiled in scandals, tumultuous employee relations, and other start-up struggles, this unlikely businesswoman grew her Harvard Business School project into a booming, billion-dollar, e-commerce company, becoming the youngest female founder to take her corporation public.
Donning a bold, burgundy shift dress, the perfect pair of pumps, and a rather rare, peculiar accessory hugging her hip – her fourteen-month-old baby boy - 35 year-old Katrina Lake stood in front of the podium at the Nasdaq Market Site in Times Square, NYC, and formally declared, “Our dreams for Stitch Fix are big and bold…And, we’re just getting started.” And, naturally, the Twitterverse went wild.
The San Francisco-based start-up-turned-billion-dollar-enterprise is the unexpected result of a business school project seven years in the making. The fashion-conscious concept was simple – a customized, “one-stop-shop” box of clothes sent to your door. Fast forward to 2019. E-commerce fashionista obsession Stitch Fix has manifested into a Silicon Valley power player valued at more than two billion big ones, employing nearly 5,800 workers with several fulfillment facilities nationwide. An “entrepreneur to watch,” according to Forbes Magazine and two-time honoree on Fortune Magazine’s 40 Under 40 list, Lake wasn’t supposed to become one of the Internet’s most successful moguls. Convincing predominately male venture capitalists that Stitch Fix was a “personal stylist service” women actually wanted was an onerous task at times. And, with the recent and very public resignation of Blue Apron’s CEO, another “stuff-in-a-box” subscription start-up, would-be investors were less than willing to fund the burgeoning fashion brand. Furthermore, with Stitch Fix share prices dropping from $16.90 to $15.15 on its opening day, it seemed the start-up would soon be falling apart at the seams.
Making the Switch: From Stitches to Stitch Fix
“I’m not somebody that people looked at and thought, ‘Oh, she’s going to be a CEO someday,’” admits Lake. The once-aspiring pre-med Stanford student never intended to start a company. Her lifelong career goals were to follow in her father's medical footsteps, donning scrubs instead of selling stilettos. But, it turned out the furtive fashionista was more drawn to economics than biology. With a penchant for digital technology and an unbridled affinity for fashion, Lake always secretly dreamed of starting a “Netflix for designer handbags.”
Following college graduation, Lake worked for a consulting firm with a focus on retail and hospitality, two prominent industries with proven stability and exponential growth that had yet to join the digital playing field. The challenge, Lake quickly realized, was, “How can we marry the ease of online shopping with what people want in clothes, which is ultimately about fit and style.” When Lake unsuccessfully failed to find companies willing to implement such market disruption, she staunchly decided to create it herself. That’s when she enrolled in Harvard Business School and conceptualized an innovative company that would uniquely combine personal styling tips with a Netflix-like e-commerce subscription model. For a small fee, customers would receive semi-regular shipments of clothing based on their size and personal style/tastes. What they wanted to keep, they purchased; what they didn’t, they’d send back. Simple, right? Her Harvard professors were less than enthused, citing, “This is an inventory nightmare.”
Styling Her Squad
But, Lake forged forward and found who would become her co-founder, Erin Morrison Flynn, a former merchandiser at mammoth fashion retailer J. Crew. “When you are doing something that no one else is doing, you’re either the smartest person in the room or the dumbest. For years, I didn’t know which one I was,” laughs Lake. Eventually, the dynamic designer duo moved their start-up to California’s Bay Area, where they would soon acquire Mike Smith, former manager of operations at Walmart.com. Shortly thereafter, Lake effectively convinced the analytics adviser of Netflix, Eric Colson, to jump ship at the mega monthly entertainment subscription service and permanently hop on board with Stitch Fix. Enamored with Stitch Fix’s stellar analytic data and extraordinary financials, Colson’s career move was an easy one. Rounding out her star-studded executive team, Lake then procured Lululemon Athletica’s, Margo Wheeler.
Weathering the Start-up Storm
From sexual misconduct allegations against one of the venture capitalist principals to an ongoing dispute with Flynn over Flynn’s stake in the start-up to a disparaging Glassdoor company review from a former employee, which referred to the company’s problematic culture as “a mean girl’s club,” Stitch Fix found itself doing damage control more than anything else. Yet, ironically, customer loyalty and retention were stronger than ever, with impressive numbers to prove it. With a game-changing investment from leading firm Benchmark and Lake’s robust leadership skills coupled with her mind-blowing numbers, the young, hardworking, and resilient entrepreneur was finally convinced to take her company public, albeit the volatile economic climate at the time. However, the glaring spotlight placed on the attention-grabbing “female CEO” label left Lake feeling irresolute about it all, as she felt she duly deserved to occupy a space of success irrespective of her gender. After all, she had toiled tirelessly throughout her entire pregnancy and had grown comfortable playing the ever-changing role of CEO, wife, mother, sister, and friend, respectively. “The thing is, we need it…we need for founder CEOs who are successful women to be in the public eye. We need diversity on boards and management teams, in decision-makers and venture investors. All of those things have to change in order to create an environment where diversity and inclusion are celebrated,” she concludes.
And, sew, there you have it, GoGirls!