Cover Story: Game Changers: Katrina Lake, Founder and CEO, Stitch Fix

Say you’re a busy woman who doesn’t have time to shop for clothes. Wouldn’t it be great if you had a personal stylist who mailed you five pieces of clothing, specifically chosen for you, and you were given the option to buy what you liked and mail back what you didn’t in a prepaid envelope? Sounds like a dream come true, right?

Well, that’s the business model behind Stitch Fix, a San Francisco-based startup that’s equal parts technology and retail, and has largely grown by word-of-mouth from women who love the service.

Here’s how Stitch Fix works: A shopper fills out a style profile on StitchFix.com to help the company understand her size, style, shape, budget and lifestyle, as well as when she would like to receive her shipment. Stitch Fix then sends her a mix of five clothing items and accessories handpicked by personal stylists. After trying the merchandise on, she has three days to decide what she wants to purchase and what she wants to return. She can return any items for free via the pre-paid mailing bag included in her order. The shopper is charged a $20 styling fee, which is applied as a credit toward anything she keeps from the shipment.

Stitch Fix was founded by Katrina Lake, whose career up until then involved consulting for retailers such as Kohl’s and Applebee’s. That experience piqued her interest in retail, particularly in innovative new retail concepts and improving the customer experience online.

“While online shopping was growing, there wasn’t a lot of innovation around what fits consumers online and personalized styling,” Lake says. “I was personally affected by the lack of innovation. I have a sister who was a fashion buyer in L.A., and she helped choose the right styles for me, but I still had feelings of frustration when shopping online.”

Ignorance is Bliss
To start Stitch Fix, Lake did something a bit unusual: she went to business school.

“I ultimately applied to business school with the intent to start the company,” Lake says. “I didn’t have money of my own and I knew I needed funding, so I treated business school as a two-year period to focus on getting the company off the ground.”

In February 2011, Lake founded Stitch Fix in her apartment in Cambridge, Mass. In April of that year she closed an investment round with angel investor Steve Anderson. Lake graduated in May 2011, and a month later moved the company to San Francisco.

Lake admits her strategy to start the company was pretty risky. “I started this company with a lot of assumptions,” she says. “I wasn’t sure if you could really style for someone without knowing what they looked like. I wasn’t sure if the ‘Style Profile’ would work. And what’s more, I was young and had no kids, so I had a certain level of ignorance that I don’t have today.”

Lake’s ignorance paid off. Stitch Fix sources its clothing and accessories from more than 200 brands, six of which are exclusive to the company. The company has more than 2,000 employees that reside in an office and warehouse, and more than 1,000 stylists who primarily work from home. Furthermore, Stitch Fix continues to grow and prosper, thanks in large part to word-of-mouth marketing.

“We don’t use paid advertising or sponsored posts,” Lake says. “We’re lucky in that we have a service that people love to talk about, so we can get the word out about it organically.”

Fundamentally, however, Stich Fix’s success can be directly traced to its focus on the customer, which makes it a true retail game changer.

“We’re constantly trying to understand our customers and what they love — or don’t love — about our product,” Lake says. “That level of customer centricity has directly influenced our growth and success.”