Stitch Fix sells $1.7 billion of clothes each year. Now, its visionary

For a decade, Katrina Lake has been one of essentially the most celebrated tech CEOs within the nation. Now, she’s able to go the baton.

The founder and CEO of Stitch Fix is handing over the reins of her firm to Elizabeth Spaulding in August, in a single of the primary female-to-female transitions of energy (if not the first) at a public firm.  Spaulding, who spent 21 years at Bain, has been Stitch Fix’s president since January 2020. Lake will stay on the firm as chairman of the board.

Elizabeth Spaulding [Photo: courtesy Stitch Fix]

Lake launched Stitch Fix in 2019 as an answer for shoppers who had been overwhelmed by navigating the sheer quantity of clothes available on the market. By combining information with experience from stylists, Stitch Fix curated packing containers of clothes primarily based on prospects’ tastes and physique varieties. Customers responded to this curated method: The model now sells $1.7 billion of clothes yearly.

In 2017, Lake made headlines for being the youngest feminine CEO to take an organization public; the IPO raised $120 million. Nonetheless, she generally bristled at how she was portrayed within the media. “I’m extra closely scrutinized, whether or not I fail or succeed,” she stated. “At some factors I resented being on lists of prime feminine founders: I’d ask, why am I not only a founder? Why do I’ve to be highlighted on this manner?”

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Katrina Lake [Photo: courtesy Stitch Fix]

On the identical time, she’s glad she’s been in a position to pave the way in which for different girls to rise within the enterprise world. Extra instantly, she’s handing the management of her firm over to Spaulding, who has bold plans to speed up the corporate’s progress. I sat down with each Lake and Spaulding to debate the previous and future of Stitch Fix.

Quick Firm: What do you make of all the things you’ve completed over the past decade? 

Katrina Lake: All of that is fascinating to me as a result of I wasn’t the child who wished to be a CEO. None of this was a manifestation of my goals. I wished to be a physician for a very long time. I even took the MCAT.

When folks hear I went to Stanford, they suppose that’s the place I made a decision I wished to be an entrepreneur. I used to be there when Mark Zuckerberg had dropped out of Harvard and was hanging out at Stanford with Larry Web page and Sergey Brin, carrying flip-flops and coding in garages. The reality is that Silicon Valley scared me out of beginning a enterprise. That tradition didn’t really feel like me in any respect.

I used to be by no means actually making an attempt to be a pacesetter. If Stitch Fix had existed after I was beginning out within the office, I’d have fortunately joined the corporate. I used to be academically within the issues it was making an attempt to resolve and what the subsequent technology of purchasing would appear like. My success was the byproduct of pursuing what I believed was a extremely fascinating enterprise thought.

[Photo: courtesy Stitch Fix]

With all the things you’ve skilled, what recommendation do you give different feminine entrepreneurs?

KL: I had a protracted dialog with Whitney Wolfe earlier than Bumble went public, and I’ve been making an attempt to advise Elizabeth via this transition. One piece of recommendation is to lean into ambition, which isn’t one thing I did.

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After I began Stitch Fix, I hadn’t dreamt sufficiently big to inform enterprise traders that I wished to be the youngest feminine CEO to take an organization public. To me, success was possibly changing into a hundred-million-dollar enterprise. I actually like that Elizabeth is leaning into ambition and seeing risk. We’re now doing roughly $2 billion in income, however moderately than fascinated with how we get from 2 to three, she’s fascinated with how we get from 2 to 10 to twenty.

Stitch Fix has practically 8,000 workers. What have you ever realized about creating a robust firm tradition?

KL: You possibly can have the largest goals on this planet, however if you happen to can’t resolve the folks half of the equation, it received’t actually manifest. You need to create tradition the place persons are aligned and linked to the mission, as a result of this lets you rent nice individuals who love the work.

I hate the notion of “tradition match.” Should you’re simply becoming in or mixing in, you’re not really bringing something new to the desk. I want to consider “tradition additions,” which implies bringing new folks to assist our tradition evolve.

I feel variety is vital right here. Traditionally I’ve been good at creating management groups with various backgrounds, which permits us to draw phenomenal various expertise. This enables us to take one of the best in what differing types of folks have to supply, moderately than having a single blueprint for fulfillment. And when groups are usually not monochromatic, it deepens the concept everyone provides to it. You create environments the place folks really feel like they are often their most genuine selves.

[Photo: courtesy Stitch Fix]

Elizabeth, what attracted you to Stitch Fix?

Elizabeth Spaulding: So much of tech corporations dabble in commerce, however it’s probably not their core enterprise. They’re not deeply innovating within the full end-to-end buyer expertise, from stock to produce chain to buyer expertise. Stitch Fix is a needle in a haystack, marrying the DNA of information and expertise, then including the human contact of styling. It demonstrates the ability of personalization in remodeling the way in which folks store.

The long run of innovation is about taking this engine of personalization and translating it right into a broader providing that each client can take part in. Our unique mannequin leaned closely into our stylists, however now we have now information concerning the $7 billion value of clothes we’ve bought. It’s like Netflix’s transition from analog DVDs to streaming. We are able to use this information to ship you a handful of merchandise we predict you’ll love, and we often get it proper inside just a few tries. Now, prospects have the choice of purchasing in a personalised retailer and interacting with a stylist when they need.

How did COVID-19 have an effect on your corporation?

ES: Again in March and April of 2020, shoppers pulled again on what they had been shopping for, not understanding what was going to occur subsequent. However then we noticed them shortly come again and noticed the sorts of merchandise they had been asking for, and commenced to refill on the products we thought had been going to be common.

We additionally noticed a change in what folks had been in search of. We noticed a 350% improve in athleisure and a 10-times improve in requests for loungewear and tops for Zoom calls. And there appeared to be a shift towards high quality. Prospects weren’t in search of disposable fast-fashion objects, however issues that might match effectively and that might final a very long time.

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In the course of the pandemic, individuals who had by no means shopped for clothes on-line had been keen to provide it a attempt, so we noticed a brand new wave of shoppers. After I joined Stitch Fix final January, 1 / 4 of [total] attire gross sales had been completed on-line. Now it’s 40%, and we predict will probably be 50% within the subsequent couple of years. We expect shoppers are transferring in a course we’re uniquely suited to.

[Photo: courtesy Stitch Fix]

Do you suppose shoppers are shifting towards extra sustainable style habits?

ES: I feel essentially the most sustainable factor we will do is purchase fewer clothes. And in a world the place that is the case, shoppers will need to purchase issues which might be extra significant as a result of they’re going to put on issues a thousand instances moderately than 5 instances.

What’s distinctive about our mannequin is that we’re all about serving to you discover belongings you actually love, like that good pair of denims. We have now loads of buyer information about merchandise they’ve purchased from us previously and this permits us to simplify the method for our stylists of discovering the perfect garment. They don’t must undergo tens of hundreds of objects to make a advice.

[Photo: courtesy Stitch Fix]

How do you keep worthwhile whereas encouraging shoppers to personal much less? 

ES: Customers will all the time want new clothes. In reality, I feel we’re going to see loads of pent-up demand for brand spanking new clothes [in the post-COVID-19 era] as a result of many individuals cleaned out their closets and are actually prepared to decorate once more.

Our purpose is to assist them get objects that actually match and put on on a extra enduring foundation, and transferring away from a fast-fashion mentality. Individuals usually take inventory of what’s of their closets and store a pair of instances a yr. Our stylists can play a job, together with the information, to short-circuit the seek for new clothes and provide a portfolio of objects that actually make sense to them.

Katrina, some of your priorities are sustainability and social influence. What are some tasks in your horizon?

KL: We’re actually interested in what position we will play in recycling. We have now bought $7 billion value of clothes which might be in our prospects’ closets. Possibly they’re prepared for a brand new dwelling.

We’re taking a look at resale, however we’re additionally all for garment recycling. There are loads of applied sciences coming to market that need assistance from business companions, which is the place we will play a component. We have now a mill and cut-and-sew manufacturing unit in Pennsylvania we purchased years in the past. It’s been superior to experiment with recycled fibers there.

I’m now centered on how we will change into a pacesetter in sustainability. It’s one thing that provides me loads of vitality, and I feel these tasks can be very significant for our firm and our shareholders.