Business Recoded … Katrina Lake uses AI to send you a box of clothing each month, which she hopes is perfect, but will learn more if it’s not.
November 2, 2020
In an exclusive extract from my forthcoming book Business Recoded, meet one of the most inspiring business leaders, shaking up today’s world. She embraces the opportunities of relentless change, the power of disruptive technologies, and the courage to create a better future in her own vision. In the book, I explore the stories of many of the world’s most fascinating leaders right now, and develop 49 codes that help you redefine the future of your business, and yourself.
The Leadership Code of Katrina Lake
Katrina Lake, founder of Stitch Fix, is reinventing how we shop.
She has always loved fashion. “Classic with a twist” is how she describes her style, a twist that was stimulated by the regular one-off clothing samples she would receive from her sister who worked as a fashion buyer. She loved the eclectic pieces and couldn’t understand why so many fashion retailers still focused on average seasonal ranges, particularly in a world of big data and AI, where more personalisation was surely possible.
Having initially worked for Polyvore, a now-defunct social media start-up that was more like a virtual mood board of ideas and fashion, in 2011 she set about creating an online retail platform that “pairs an army of stylists with an arsenal of data to deliver clothing”.
Stitch Fix actually started in a small Boston apartment, whilst Lake was still studying for a Harvard MBA at the time, along with her co-founder Erin Flynn who was a former buyer for J Crew. “We cobbled together things you could do online for free,” says Katrina. She started by doing lots of free online surveys to find out what potential consumers might want.
“I felt so strongly that the way people were shopping was not going to be the future. I was like, there’s no way that the future of buying jeans is going to be spending a day at the mall or even searching online. Searching online for jeans is a ridiculously bad experience.” She recently told New York magazine.
Stitch Fix quickly took off. “It was 30 people, then 50 and then 120, and kept growing. As a female entrepreneur, a big challenge was raising funds from the male-dominated investment community. “I didn’t have the trust of a lot of investors, and for me the biggest reason was around the lack of diversity in the venture capital world,” she says. “Male investors would say things like ‘I can’t see myself wanting something like this’, and I’d be, ‘Ok, well you’re a Caucasian male who is very wealthy, and maybe this isn’t the service that you would use.'”
Consumers order “fixes” of five items, selected for them by professional stylists, as a one off or by subscribing to regular deliveries of their chosen intervals. On receipt of their fix, have three days to choose which items they want to keep, and others to return. The genius of the approach is that algorithms quickly learn about the likes and dislikes of individuals, and send more personalised selections each time. And of course, once in receipts of items, the customer is more likely to hold on to them, rather than just browsing through an online site.
Stitch Fix essentially combines data science, personalised marketing and a platform-based business model to drive growth. Chris Moody became Stitch Fix’s lead data scientist. He also has a PhD in astrophysics focused on using supercomputers to simulate how galaxies crash into each other. He uses the same analytical rigour to fine tune the perfect selections for each Stitch Fix subscriber. He describes the business more like an online personal styling service combining Netflix-style algorithms with human intuition and curation supported by a team of around 100 data scientists and 3,000 in-house stylists who fine-tune each fix.
In 2017, at the age of 34, Lake became the youngest woman to take a company public. The IPO raised $120 million and valued Stitch Fix at $1.46 billion. As she appeared at the Nasdaq stock exchange in New York for the company’s first day of trading, she held her 14-month-old son in her arms. The images went viral. She was quickly seen as a role model for women, and mothers, in business. “It felt like a really meaningful moment for me, and hopefully for others as well,” she told CNN.
Lake become not only a pioneer for better shopping, but for a better workplace too. With a mother who was a Japanese immigrant, she is focused on promoting diversity within her company, both women and people from ethnic minorities. But ultimately, Stitch Fix is a fusion of passion and science “When you think of entrepreneurs, you think of somebody who is super risky and stays up for all hours tinkering with something in their garage.” Instead she prefers a smart business plan, clever technology, good people, and sleep.
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