Success. Achievement. Accomplishment. These are all words we want to describe our business endeavors. So what is the formula? Although a single recipe for overflowing revenue does not exist, wisdom still comes from sitting at the table of successful individuals. One such individual, Katrina Lake, took a risk and caused Stitch Fix's success, becoming the youngest woman to take a company public.
Testing a Concept
Katrina didn't start with a billion-dollar business. In fact, the first iteration of Stitch Fix, according to her interview on NPR's How I Did It, was very simple. Convenient, personal styling.
She asked friends and acquaintances what their clothing preferences were. She then bought the products from stores and shipped them. If the friends liked them, they kept them and paid for it. Katrina noted what the return policy was for the clothes, so they could be returned on time. She did this with about 20 people as she tested the concept of Stitch Fix.
During this time, making money didn't happen. This entrepreneur was selling at-cost, just so she could test her idea.
Talk about scrappy.
As Stitch Fix grew, it wasn't a fancy algorithmic website. It was a simple form people filled out, and in turn, designers shipped clothing choices to customers.
Balancing Risk and Confidence
Katrina was a business advisor. For part of her job, she was to be in the room where entrepreneurs would pitch to investors to get funding. Her memos on the investments summed up the opportunity, which she sometimes also evaluated.
But the most important lesson she says she got out of these pitches was that sometimes all it takes is guts.
“The most important learning actually was that all of these people were just like super unqualified normal people with lots of ideas just like I was,” she says. “I think it was actually the more powerful thing was that I realized that if I have all these ideas about what should be happening, [then] I don't need to be in the peanut gallery lobbing my ideas.”
“I should just do it myself and that I could do it myself.”
But that realization was also tempered by her appetite for risk. That’s why she went to Harvard.
“I was never going to quit my job and take on this risk and have a gap in my resume. That was never a choice in my mind,” she says.
Katrina believed the path could have unfolded two ways.
“I can take these two years. I can be a mediocre student. My end goal by the end of the two years is if I can have a company funded, if I could be paying myself a salary, if I can be paying back my student loans the day I graduate, then the risk profile of entrepreneurship was tenable to me.”
“If I can’t do that, I’ll have this MBA from Harvard and I’ll be able to join a great company and a great founder and do something interesting,” she adds.
Finding Stitch Fix's Success
Although it wasn’t apparent in the eyes of Silicon Valley investors that Stitch Fix would even succeed, it absolutely did.
From that small beginning, Stitch Fix has grown to have $1.6 billion in revenues in 2019. That’s up 29% from the previous year.
3 Takeaways to Apply Immediately
- Action - When you have an idea, act on it. Daydreaming and hesitation are traps that entrepreneurs should avoid. Does your idea seem complicated? Do you not have enough time? Whatever’s stopping you, find a way to work around it.
- Small Steps - If the task seems daunting, start small like Katrina Lake. Break down your project into smaller tasks. Then begin crossing them off one by one. You do not need to build a fully developed product to start making sales.
- Testing - Focus on testing your idea, before you spend a lot of money on a fully developed product.
So you have a big idea. A new concept. A new direction. If there’s something there and you work hard enough, the billion-dollar business will emerge.
As we have learned from Stitch Fix's success story, your dreams will only become reality if you start.