I don’t know about you, but I find stories from entrepreneurs to be fascinating. The tales that draw me in are those I wish I would have a) thought of myself and b) had the courage to jump in and start. One of these is Stitch Fix.
A few years ago I started to hear friends talk about a new online service that offered clothing, selected by a stylist based upon your preferences and sizes, delivered to your door. Customers try the clothes on, keep what they love and send everything else back. While that description sounds like what happens a few days after I’ve had too much time to search Macys.com, the genius of the Stitch Fix concept is how they use customer data to tailor your boxes. I was fascinated to learn more about the business model.
For this reason, I jumped at the opportunity to hear Katrina Lake, founder and CEO of Stitch Fix, speak as part of a panel of women leaders at the annual Dreamforce conference in San Francisco in September.
Here are five key points from her story:
The first few months
The company started as a personal shopping service at an accessible price point. It was created for people who couldn’t access personal shopping. The company didn’t have a website for the first six months, so it relied on email for invoices and Paypal to process payments. The first “fixes” were sent out of Lake’s Cambridge, Massachusetts apartment.
The most challenging time
In 2012, the company was six weeks late making payroll. Lake couldn’t get venture funding because their money would be tied up in warehouses of dresses. Over 50 venture capitalists said no, either because they didn’t believe in the business or didn’t want to be part of it. Lake stated the most alarming part was how many just didn’t want to be part of it. Despite this, the company’s fundraising efforts eventually made the company stronger. They had to focus on how to be financially diligent and have so far succeeded.
Best business advice
“Surround yourself with amazing, intelligent, smart, capable people. Have someone for coffee. They don’t need to be on the payroll but instead be a sounding board to test ideas and get advice.”
Lake graduated with a degree in economics and solid understanding of econometrics (the application of statistical methods to economic data), which is an important component of the company. Stitch Fix gathers customer data and has algorithms set up to analyze the data submitted through customer preferences. They use this data to aid in “curating” clothing by personal stylists who put together a mix of items – a mix I may not have picked for myself if shopping on Macys.com.
Lake said she can’t map the complete path of what the company will look like in the future. What she does hope for is scalable personalization. If this model can work for clothing, what else can algorithms and curation work for? She has confidence in the company’s ability to always find one little thing they can do better – tomorrow, next week, next month. That is what is going to make them a success.
What is the best advice you’ve ever heard from an entrepreneur or the best story of how a company got started? We’d love to hear about it.