Stitch Fix founder Katrina Lake built one of the few successful e-commerce subscription services

Katrina Lake, 34, is the founder and chief executive of Stitch Fix, a San Francisco clothes shopping start-up that brought in $730 million in revenue in its 2016 fiscal year that ended July 31.

Stitch Fix is regarded as one of the few major success stories in the subscription shopping world. Customers fill out a detailed profile of their size, style and taste and receive a box of five pieces of clothing, shoes and jewelry monthly, bimonthly or quarterly. The items are hand-picked by Stitch Fix’s 3,500 full- and part-time stylists, who work with the company’s team of more than 80 data scientists to suit customers’ tastes. Stitch Fix charges a $20 fee for each box (which goes toward any purchases the customer makes), and clients pay extra for the clothing they keep, and can return what they don’t want.

The company has more than 5,000 employees, five clothing warehouses across the U.S, and $42 million in funding from venture capitalists. It most recently launched Stitch Fix for Men, a similar service for men’s fashion.

Not always entrepreneurial

Lake grew up in San Francisco and Minnesota, the daughter of a doctor and a school teacher. Unlike many start-up founders who describe having an entrepreneurial streak from an early age, Lake said she had always been risk-averse and attended Stanford with the intention of becoming a doctor. She tackled the pre-med curriculum but ended up majoring in economics because she was fascinated by the way data and statistics could be used. “I got sucked into the economics side of the world,” she said.

But what her family lacked in entrepreneurial spirit they made up for in creativity, she said. “Creativity was definitely a big part of our household, and I remember always writing stories and being encouraged to be creative.”

Creativity in restaurants and retail

Lake’s creativity followed her to an early consulting job she held at the Parthenon Group, where she analyzed data for the restaurant and retail industry. Part of her job was to figure out how consumer behavior was changing and ways restaurants and retailers could adapt.

“When I was at Parthenon, we worked for a department store client and the project was very open-ended: What is the future?” she said.

She had big ideas, including a store concept in which half the space was laid out like a museum where people could be inspired by the outfits on display, and the other half of the store was dedicated to fulfillment. Customers could wave a wand (this was before the ubiquity of smartphones) at the clothing they were interested in trying, and those items would be waiting for them in a fitting room on the other side of the store, complete with accessory recommendations and store assistance.

“Those were the types of ideas that I had, and people looked at me like I had three heads,” Lake said. “Even today, it’s a very foreign concept.”

Lake knew she wanted to be on the cutting edge of the retail industry. But bricks-and-mortar retailers weren’t the answer. So she decided to find out who was.