Katrina is the founder and CEO of Stitch Fix. Prior to founding Stitch Fix in February 2011, she developed extensive experience at the intersection of fashion and technology. Most recently, she developed and managed Blogger Syndication at Polyvore. Prior to Polyvore Katrina worked with the personalized shopping newsletter Shop it to Me in San Francisco. She has also worked with dozens of e-commerce and traditional retailers during her time in venture investing and consulting, first at The Parthenon Group and later at Leader Ventures. Katrina has a degree in Economics from Stanford University and an MBA from Harvard Business School.
As part of our entrepreneurial interview series, we sit down with Katrina Lake, who founded StitchFix while at Harvard Business School. StitchFix delivers a personalized shopping experience do your doorstep when you want it. She offers advice on starting a business, and shares some of the financial decisions she made in starting her company.
When did you know that you wanted to be an entrepreneur?
KL: I’d seen many applications of technology to various spaces when I was in venture capital, and I wanted to work on bringing some of that to retail. I was thinking of joining a company that was working in the space, but wasn’t particularly compelled by what I saw in the market. It was more of an accident really. Business school was an incubation period for testing ideas. I call it the de-risked way to start a business.
How did you know you could do it? Did you ever have any doubts?
KL: At the time, I just started doing stuff, and one thing led to another. I’d worked at ShopItToMe, so I knew what it was like to be at a startup. I figured I had the skills to run an office, to learn QuickBooks, etc. There were just a series of little wins and figuring out I could do it, rather than a large grand assessment of whether I could do it. My answer would be different now, I have a peer group that has successfully started companies. So I can look around and say, hey if they can do it, so can I. Part of what gave me confidence was that I had tested the business model extensively while at business school. I knew the economics worked.
What advice would you give to aspiring entrepreneurs?
1. Be absolutely passionate about the idea. You have to live and breathe it. I spent a long time looking at the hunting and fishing space – a huge market that is ripe for disruption. But I’m simply not passionate about hunting and fishing! It’s really hard to start a business if you don’t care about it. At the margin, when it’s 2am, it has to be that passion that pushes you forward.
2. Don’t be afraid of competition. People always say “other people are doing it”. The world is changing so fast, there is room for lots of players to innovate in different ways. Competition validates the market and isn’t a bad thing.
3. Your team is crazy important. Quality is worth paying for – it is possible for an “A” player to be 10x more productive than a “B” player.
How did you think about your personal finances when you were starting StitchFix? Do you have any good hacks?
KL: I was an idiot about my personal finances. Before we raised money, I didn’t have any money. I was paying for inventory on my personal credit card. I had written into the term sheet that I would be paid back when we got funded, but it would have been a bad situation if the fundraising process had dragged on for a few more months. I was at my credit limit and had no cash. I had 5-7 days of cushion between when we got funded and when I would have hit the wall. It was not smart. With my vendors, I should have asked for better payment terms earlier. A lot of times we just had to ask. For the most part, people will figure it out. Everything is negotiable.
Hacks? All of our furniture is free. A lot of moving companies have warehouses of furniture from jobs where they moved people and the old furniture didn’t fit in the new space. I optimized my mover choices based on who had the best inventory of furniture! It’s the kind of hack you figure out because you’re poor.
Thanks for sitting down with us! You’ve given Matt and other aspiring entrepreneurs a lot to think about.