Katrina Lake & Molly Wood | 2018 MAKERS Conference
Katrina Lake, Founder & CEO, Stitch Fix, interviewed by Molly Wood, NPR, on being a female founder and taking her company public
- Ladies and gentlemen, Katrina Lake and Molly Wood.
MOLLY WOOD: Welcome. Hi, everybody. It's so nice to have even the women backstage cheering for us when we walk out. What a great place to be.
KATRINA LAKE: Amazing.
MOLLY WOOD: So we are, Katrina, here in the middle of Hollywood, so it is a little hard to say that Silicon Valley is the worst when it comes to the treatment or representation of women. But I think we can agree we have our own special level of hell. For example, in 2017, I wrote this on my hotel note pad, 17% of startups had female founders. That number has been flat for five years. McKinsey, I think, yesterday, showed some research that said that 4.4% of venture capital deals go to women, 2.2% of those deals go to all women teams.
And yet, in this landscape you conceived, got funding for, and eventually had a successful IPO of a $1 billion unicorn company, Stitch Fix. Katrina, start at the beginning. I mean, when you look back on that journey and those meetings with venture capitalists, like, the number of no's, are we talking, it can fill a bath tub or like an Olympic sized swimming pool?
KATRINA LAKE: It was-- I mean, actually, I can't tell you how many people said yes. And it's the three people that were investors in Stitch Fix. And I have a Google spreadsheet of all the no's and all of the why's, and yeah, it's probably more in the swimming pool range than a bath tub, it's 50 plus.
MOLLY WOOD: Yeah, because not only were you a woman founder, you were also pitching a company for women, so double whammy, one assumes. But what were the why's that they would give you?
KATRINA LAKE: There were, you know, there were a lot of-- I think one of the things that was a blessing to me in starting a company was that in some ways, like, I was, I don't know, I was naive. I had never managed another person in my life when I started Stitch Fix. I had been like, an associate at two different companies, like, producing investment memos. I really hadn't done this before and so I could look at everything with a fresh set of eyes of just like, how should this be done? And who should I be working with? And what-- you know, how should this all go?
And so in some sense, I was a little bit insulated from like, the odds are so stacked against you and all of the kind of negative things that you can tell yourself when you're starting a company. But the no's were all kinds of no's. It was no, like, I just don't believe this can-- I don't know, I just don't believe that many women will shop this way.
There was no where it was like, I would come in and I would have a box that was a fix, and like, a guy looked at it and was like, I just don't understand why anybody would ever want something like this. And like, I appreciate the honesty, I'm like, OK, great, this doesn't seem like a fit. I'll move on and find somebody who is excited about this. But there were-- trying to think what some of the other no's were.
I mean, the harder no's were the ones that were like towards-- there are seeds-- there are seed stage no's which are really around like, this is a good idea, are you the right person to execute it? I don't know. There are-- the later stage no's are the harder ones. And so the Series B no's of like, I have a business that is generating millions of dollars, people are waiting 60 or 90 days to get a Fix because like, we don't have the infrastructure to serve like the millions of people that this is an attractive proposition for.
And I have an amazing team, I have the COO of walmart.com who's my COO. And the guy who ran all of the algorithms at Netflix, like runs all of algorithms at Stitch Fix. I have an amazing team, the business is working, clients love it, and they're waiting to get the service, and yet, people were like, I just-- I just can't get excited about it.
MOLLY WOOD: Yeah.
KATRINA LAKE: And like, those were really hard because it was like, I knew that I was pitching a female-oriented product to a very male-oriented audience. And so I really like-- and there are some VCs out there that you can ask, and they will tell you that I was the entrepreneur, more than anybody they've ever met, that knew my numbers inside and out.
MOLLY WOOD: Yeah.
KATRINA LAKE: I knew every number inside and out. I knew every single metric. I knew all-- I knew all of this stuff. And so even if I couldn't appeal to like, somebody gutturally loving the concept of it. I wanted to appeal to like the capitalist part, and like, you can make a lot of money doing this. And like, it was hard.
MOLLY WOOD: Yeah, and even then sometimes-- Well, and there was a great Bloomberg headline that basically said, Stitch Fix has had to do more with less. On top of all of that, you got a little less money, right?
KATRINA LAKE: A lot less money.
MOLLY WOOD: A lot less money.
KATRINA LAKE: This is a company that's doing basically a billion in sales in the last 12 months and we did that with less than $50 million in capital.
MOLLY WOOD: Wow. Wow, right? And then, I also feel like this would be a great time to point out that when you had your initial public offering, your public photo of the IPO was you with your baby. Not for nothing, there are also babies in this story. And you were on stage with your one-year-old.
KATRINA LAKE: It's-- you know, it's amazing-- it's like a very odd time in your life to start a company when you're a start-- I started a company-- I started this when I was in my late 20s. In the seven years since I started Stitch Fix, I met my husband, I got married, I had a baby, I took a full 16 week maternity leave, like-- you know, there's never a good time to do anything. And you could argue this wasn't really a good time to do it. And that picture ended up meaning, I mean, so much to me, and I think, so much to many people. And it was totally unplanned.
I mean, the story with the IPO was like, the two weeks leading up to it you do like, a road show and you meet all these investors, and like, it wasn't going well. And like, we were going to price below the range of where we thought we should be able to price. And it wasn't-- we had this moment where it was like, this isn't going as planned and you know what? This feels comfortable, we've been here before. Things have not gone as planned before, and we actually found strength in that and found empowerment in that.
And so, it was really, to me, feeling like, F- it, this is our IPO, we're going to do it our way. And I had my son, who, at the time, was just over a year, was in New York to be there for it. And he had-- I head held him during the dress rehearsal and he was super chill and happy to be there, so I was like, let's just do this. And he was up there with me the whole time. And it wasn't-- it wasn't like, thoughtfully, strategically planned but it ended up being important.
I have a workforce that is-- we have almost-- we have over 5,000 employees, many of whom are women, many of our stylists are prioritizing their families to be able to do a more flexible job. It's important because-- it's important, of course, there's a lot of-- there's some themes yesterday around if you can't see it, you can't be it. And it is important because my mom is an immigrant, I'm mixed race, it's important because I have a child up there. It's important for little girls and boys to be able to see other examples of what somebody going public looks like.
But it's also actually important for the white venture capitalists males, who are going to encounter an entrepreneur who's pregnant or an entrepreneur who's 30 and just got married, and he might think to himself, maybe she's going to have a baby. It's important, even for them, to be able to see the example of like, these are achievements that you can have, and at the same time, live the life that you want to live.
MOLLY WOOD: Yeah. And now, Katrina, along the way you, unfortunately, encountered what, I think, so many female and would be female founders, encounter, which is sexual harassment in the VC community that you can't talk about. Which is, sort of, also part of that whole problem, right? That whole toxic ecosystem. But I would like you to talk to us about the choice that becomes part of that. Like, as a founder, the company is the baby too, and so how do you make that-- walk that line about how sometimes you have to get through?
KATRINA LAKE: Yeah, and I mean like you said, you know, there's nothing specific that I can talk about with that. But my journey as an entrepreneur was not easy. And I'm so grateful for Time's Up and for Me Too and for the media and for so much that has happened to create a safer environment for entrepreneurs. And an environment that's more inclusive for entrepreneurs.
MOLLY WOOD: Has it? Do you think that's happening?
KATRINA LAKE: You know, I think that at least the worst situations are out there. I think-- one of my fears is that I think there are probably a lot of managers who are doing things that aren't great. And, you know, that there's still-- I absolutely don't think that it's eliminated everything. But like, I don't know, I think that it's net/net we're better off.
MOLLY WOOD: Yeah.
KATRINA LAKE: It's hard to imagine we could be worse off.
MOLLY WOOD: Well, and one of the things we've been talking about a lot, and that has really been a theme in this conference, is using your power once you get it. You know, and how do you become not just a successful CEO, but someone who is influencing the people around you. And sometimes saying things that they have never heard before. Like, tell us your hot tub story. I mean, this is just-- you know, when you think about culture and how deep some of this stuff goes, you've got sort of a perfect example of being the only woman in the room.
KATRINA LAKE: I mean-- I couldn't have been the only woman in the room. But I was at a conference, that was actually kind of like this size, it wasn't a huge conference. And there was a VC who was being interviewed who-- well, Chris Sako was being interviewed up there, I've already outed his name on there.
But Chris Sako is being interviewed, and he was like-- he was saying like, I have a very untraditional approach to VC, like, I don't even live in the city, I don't even have an office, I live up in Tahoe. And like, you know, I invite entrepreneurs up to my place in Tahoe and I have them tell me about their company over beers in the hot tub. And I can get to know them more as humans that way.
And I was sitting in the audience like, literally pregnant. I was like so-- I am-- you're asking people to come pitch to you in a swimsuit and I'm literally pregnant, and I actually can't come into your hot tub, and I actually can't drink your beers.
MOLLY WOOD: Yeah.
KATRINA LAKE: And like, you know-- and you're-- I was in a room with like, hundreds of people, and maybe they were all thinking the same thing. I don't know if they were or they weren't. But like, it was just it was stated out loud. It wasn't tweeted, it wasn't controversial, and this was two years ago. So I think that things like--
MOLLY WOOD: But you said something.
KATRINA LAKE: I didn't say something at the time.
MOLLY WOOD: No, but later to people who were like, oh, I didn't think of it that way.
KATRINA LAKE: But I did-- and at that time, it was so funny because I remember talking to the woman who was doing PR at Stitch Fix. And I was like, I'm so offended, I feel like I should light him up on Twitter. And I literally went through the whole thought process in my head. And I was like, there's no downside to lighting him up on Twitter. He's going to tweet storm me, like, what is the upside in doing this? And I'm embarrassed that that was true, and that I-- and I didn't do anything at that moment. But it-- I do think this is where I think change actually has happened. Because I do think now it's a little bit of a different time.
MOLLY WOOD: Yeah. Well, now, when given your opportunity, you did go after some of your colleagues over their-- over Uber, right? And that toxic culture.
KATRINA LAKE: Yeah, and so as we segue into the now what? And where do we go? Like, I think there are a couple-- what would I say? So I'll bucket my-- should I just segue there?
MOLLY WOOD: Yeah. You're doing great. You're totally segueing, it's happening.
KATRINA LAKE: [LAUGHING] There are-- I think there's like-- there's two things that I think are big things that we can all-- or that some of us can do. And then there's a bunch of little things that every single one of us can do every single day. On the two big things-- and I'll talk about the Uber thing also, but I think one thing is around I'm using a market-based pay approach. And so, that's one thing that we did at Stitch Fix, where it's not perfect, it's still-- there's still imperfections in it, there's still challenges with it.
But if you use a market-based pay approach and you're looking at people blindly based on their years of experience and their responsibilities, and you're not looking at who is the squeakiest wheel and who yells the loudest, it's a much better place to start from. So if you're in a position where you can implement that at your company or you can push for it, I would encourage that.
There's one other thing as-- we'll talk about the Uber thing, I might have to come back. But so the other-- I have another thing-- well, so in the use your voice and your influence topic, I'm in a place now where I am able to have a direct line to more people, and so I'll have a big and small way to talk about this. But I think in a big way-- Bill Gurley is an investor in Stitch Fix, he was on the board Uber for a very long time. And when the whole Uber culture stuff started coming out, I was just kind of appalled and horrified, and like many of you probably were too. Like, I can't believe this company culture exists today, in 2017.
And so I wrote Bill a strongly worded email. And in that moment, and what I've realized, is there are all these decisions that you can make where, like, what's the worst thing that can happen? Like the worst thing that can happen is that Bill says, thank you I respect your opinion but I'm good. The worst thing that can happen is nothing. And the best thing that can happen.
And I wrote him this strongly worded email about how he and I both have this responsibility in the world to create the future, not just as companies, but also of company cultures, and where people work and what those companies stand for. And the best thing that could happen was that I could have been the straw that broke the camel's back, that that caused Benchmark to do something. And they did something. And Benchmark deserves a lot of credit for what happened from there.
And even if you don't have Bill Gurley's ear, there are other small examples of things that I can do. And so for example, when I was pitching to-- during the roadshows. I was meeting hedge funds and fund managers, and meeting all these 12 investors at once. And I was in a meeting where it was like six people on this side, and there's a young woman who was leading the meeting, and then the partner or whatever was sitting next to her. And he was like, at the very beginning of the meeting, he was like, all right, sweetie, why don't we get started.
And like, I'm kind of like, did that really happened? Are you her dad? And he wasn't.
KATRINA LAKE: And--
MOLLY WOOD: Right. Just to be clear.
KATRINA LAKE: Just to be clear. And look, like, I wasn't in a position where I was going to be able to light him up, and I shouldn't have lit him up. But what I did is after that meeting, I sent her an email. And I was like, it was such a pleasure to meet you, you are a bad ass. And what's the worst that can happen? Nothing. What's the best that can happen? That she reminds herself, I'm a badass and no one's going to call me sweetie at work. Or like, I'm going to start my own hedge fund and I'm going to make my own billion dollars. There are potentially good things that can happen if you just nudge it a little bit. And I think there are little things that we could all be doing every day.
I just remember my second thing too. My second thing, so--
MOLLY WOOD: We're at zero. Like, is Dillon going to run out? OK go.
KATRINA LAKE: OK.
MOLLY WOOD: I'm going to give you like, 15 seconds. Go.
KATRINA LAKE: So there's market-based pay. The other thing, we can all do this. So you know when you RFP? You're like, OK, I need a new ad agency, or I need an investment bank, or I need a law firm. Many of us are influencers and decision makers in this room, and you send our RFPs. And you say, tell me a little bit about like what your capabilities are, what would your strategy be? Ask about gender and diversity metrics. So I ask--
KATRINA LAKE: I asked-- when we worked with investment banks, I asked them, what percent of your-- can you share your gender diversity metrics for your VP and above people in your investment banking division? And, look, to be honest, that wasn't the main decision criteria, but people had to go and talk to their boss, talk to the head of investment banking, they had to go get the data. Then they had to explain the data and say, why is this not what we would hope it is? And what are we doing about it? And so if nothing else, I created conversations in all of these places that maybe would not have happened. And that's something that I think all of us can do in our day to day as the decision makers that we are.
MOLLY WOOD: Katrina Lake, CEO of Stich Fix, everybody. Thank you.
KATRINA LAKE: Thank you.