>> it is one of the few tech unicorns founded by a female entrepreneur. katrina lake started packing boxes of clothes, then mailing them to customers. those customers kept coming back and multiplying. but after initial investment, some 50 venture capitalists turned her down. that was a mistake. in 2017, stitch fix went public. valuation$2.5 billion and has expanded to new categories, including men, plus size, maternity, and kids. lake became the first woman

founder ceo to take an internet company public in years. joining me today on "bloomberg studio 1.0," katrina lake. katrina, i am glad to have you on the show. katrina: thank you for having me. emily: you have helped millions of customers discover their own sense of style. first women, then men. everyone now from plus size to pregnant. what is the number one mission of stitch fix, the business, today? katrina: the thing we love is every day, we get to help 2.5 million men and women look their best. what we're doing is we are bringing this luxury of personal shopping and making it democratic, making it accessible, so that anybody can let us know what their size and style preferences are, and have a stylist make selections for them. emily: how many boxes are you sending out each month?

how many stylists do you have? katrina: we have over 3000 stylists all over the country. they are employees of stitch fix. they are trained by us. our stylists mostly work part-time. there is some flexibility in around how many clients that they are serving. the most recent number we shared is 2.5 million clients. emily: growing up, you were the kid wearing raver boots and jnco jeans, and i want to know how you discovered your own sense of style. what was it like growing up for trina lake question -- katrina lake? katrina: i grew up in a multicultural, bilingual household. my mom is from japan and my dad is american. that always kind of introduced us to a lot of cultural curiosity and sense of adventure and exploration and learning. in my household, my younger sister was the fashionista of the family. she would wear like purple-sequined whatever.

she was definitely the one that was more about pushing the limits of fashion. emily: raver boots aren't pushing the limits? katrina: it made it so it was a way to express your identity and experiment with your style and who you are. i think that fun part of trying to understand your style is a big part of what stitch fix is now. emily: your grandmother had a big influence on you. katrina: my japanese grandmother was born and raised in japan at a time that women didn't have a ton of opportunities. she was in an arranged marriage. she had two daughters. my mom and her sister. she felt this great obligation with the two daughters, she had to set them up for the lives she would have wanted for herself. decades later, my mom and her sister moved here. my grandmother would follow suit. it was this amazing inspiration of somebody who wasn't

necessarily given a lot of opportunity and circumstances to set these bold goals and achieve them. emily: you ended up at stanford. you majored in economics. this was about the same time mark zuckerberg was on campus. in that time, did you ever think you could do what he was doing? katrina: it was not even close to on my radar at that point. my path to entrepreneurship is a very wandering one. i think i had a preconceived notion of what a founder, especially a founder of a tech company, looked like. it truly wasn't even visible to me as a career path at that point. emily: what was it that flipped the switch? katrina: i was inspired by the opportunity to transform retail. i looked at retail and thought, there are so many different ways you can incorporate data and

technology and data science into the way retail works, and i didn't feel like i saw companies that were really doing that. at first, i was in a journey to find that company, looking at pre-existing retailers and seeing which one did i think would win, then it was meeting hundreds of founders to try to find a founder i could join, and ultimately i thought there was this opportunity to transform retail in a different way. i could found that company myself. emily: ultimately you went to harvard for your mba. that is where you started stitch fix. you sent the first stitch fix from your cambridge apartment in 2011. how did you get there? katrina: i had this thesis around, retail has to change. stores are closing. today's version of how people buy clothes is not sustainable. what i realized i wanted to start my own company, i thought

going to business school was a risk reduced way to do it. i was not going to just quit my job and work out of my garage. my goal was to get funded, to pay myself a salary, be paying back my student loans the day i graduate. if i can do that, i can find entrepreneurship as a tenable path. if i wasn't, i would have an mba from harvard and opportunities. emily: so you had a cofounder. you bought a ton of clothes on your credit cards, right? katrina: a lot of the testing and trying i did with my own credit card and finances. this is a business that we were lucky enough to have steve anderson, an angel investor, who believed in the company and put in money. i didn't have to try to expand my credit limit too much. emily: what was it early on that made you realize this could work? katrina: we grew incredibly rapidly, all organically. of, thisuct market fit

is something that women everywhere gravitate towards, like, i don't want to go through hundreds of things online, and i s that i lovehe that our personal bully -- personally convenient -- the value proposition of that was so strong that the early growth was kind of a manifestation of that. emily: it wasn't obvious to everyone. dozens of investors said no. katrina: i think people had a hard time getting passionate, wrapping their head around it. there's some questions around, can this be a billion-dollar business or not? we have done $1 billion in the last 12 months now. we were looking at the data and we had clients all over the country. we felt like we had the data to support that this is a broad concept that has broad appeal. a lot of investors didn't feel super passionate about it and couldn't get there. that was hard. emily: how much of that do you

think is because you are a woman pitching mostly male investors about a product that was focused on women? katrina: i think that has to do with the element of somebody being passionate about it. i appreciate i had investors , that were like, i want to be passionate about the companies i am investing in and i want to feel like i can add value, and i can't get there with women's clothes. there's part of that that i can't disagree with them. i want them to feel passionate 94% ofthe same time, investors were men. there is some natural bias that gets introduced when you have such a homogenous group of people. emily: ultimately, you dig it interest from one of the investors in silicon valley, bill gurley, who has also invested in uber, and i think he has his own assistant to thank.

she became addicted to stitch fix. katrina: yes, amy, who is his assistant. many of her friends and people in the office all love stitch fix. he was curious and he was like, i have to understand what this company is doing. we were not looking for money at the time. as i got to know him, it was clear that he would add a lot of value. that has been amazing for my development. it helped the company make changes in the way we operate. we have been lucky to work with him. emily: you and your cofounder eventually parted ways and you have become the sole face of the company. katrina: my cofounder and i parted ways about a year-and-a-half in or so. fortunately, in the summer of 2012, i was able to recruit the coo of walmart.com, who is still on our team and still our coo. also eric, who came from netflix. there's been a lot of continuity in the leadership. emily: was it hard breaking up with your cofounder?

katrina: absolutely. it is some of the hardest stuff that founders go through. you get to a place where you see things through a different light. they do not meet. it was hard. being able to have mike and eric, who have now been with the company for five years, they were mentors in a lot of ways to me. i had never done this before. i feel fortunate to have a team -- there's many people who have been at the company for a long time. to have a leadership team that has had continuity is something looked atd us as we milestones and as we grew and as we thought about becoming a public company. this has a 72% chance of working. this has a 38% chance of working. ♪

emily: stitch fix was profitable two years before you went public. was that a priority? was that a choice? katrina: we live in an interesting time. i think companies are rewarded for growth. our business has been growing the last four quarters. but i think companies are rewarded more for growth than for profitability. there's not a lot of pressure to get profitable. i understand the decisions others are making. that wasn't necessarily a choice we had. our first quarter of profitability was in 2014. this was a business that was hard to raise money for. our company is better because of it. emily: in 2017 stitch fix went billionn a $1.5 valuation. you are the youngest female founder to take a company public. how did that feel? katrina: the whole process was rocky for us. it wasn't as smooth as you might

want it to be. at the end of the day, it did not matter. i think this is a company that has been underestimated before. we are happy to prove ourselves in the public market. and that day of being able to celebrate and remember the journey that we were on, it was an incredible day to be able to share with all of our clients and our employees and our investors and the people who have had such meaningful impact on how we got to where we are. it is a day i will never forget. emily: what is it like on the other side? is it easier, harder? katrina: it is different. i think about, in my job, the seven years i've been doing this, every year i think of myself as rehiring myself in a new job. and committing to that job. every year has been so different. there are years when my job is making sure that everybody is

getting fixes out the door. that was the most important thing i was doing in 2012. emily: what is your job this year? katrina: i now have not just private market investors but public investors that we are building trust with and spending time with. there are small things that change, but the heart and soul of the company hasn't changed. in the ways it is different, it has made us better. we look at our financials with more rigor than we did before. we are focused on making sure that we build long-term value for our shareholders, which includes new shareholders and employees. i think we feel a lot of responsibility for that. emily: how big is your potential market, and why? katrina: the apparel market is a $300 billion market. that is growing. you hear a lot about the death of retail, especially retailers that are struggling. we have this tailwind of consumer behavior and stores

closing and what is going on in the macro environment. there are two big things we did, the launch of men's and plus size. those doubled the number of bodies we could dress. the state of physical retail is dismal. look at the gap. emily: does that turnaround? katrina: i think there will be a place for physical retail. it is a great place to experience a brand. but i think the idea that a brand would have hundreds or thousands of stores across the u.s. is going to be hard. the natural preference of consumers is they want to transact online. stores have to have a different reason for being. emily: everyone seems to be worried about amazon. no matter what business you are in. do you worry about the threat of amazon? they have successful subscription businesses. they have not done apparel yet. what is stopping them? katrina: it is a very different ballgame. amazon is amazing if you want something cheap and fast delivered to your home.

in apparel there's much more nuanced. having millions of pairs of jeans isn't helpful if all you are looking for is jeans that fit your body well. we keep an eye that at the same time, -- but at the same time, we feel a lot of confidence and strength in our capabilities. that is a different business than we are seeing with e-commerce today. emily: would you ever sell to amazon or a larger retail giant? katrina: i think it is clear we've chosen an independent path. we have thought about the outcomes that are potentially available to us. we have a deep belief that this is a company that deserves to be an independent, publicly traded company. there's still tons of market opportunity ahead. we are focused on the independent path. emily: there are a lot of other companies trying to do what you do, other subscription services, whether it is daily look -- katrina: what differentiates our business is it is not the subscription tag.

the business is one that you can do monthly. you can also do it a la carte. people are not paying the same amount per month as you do in a normal subscription. we do one-to-one personalization. emily: how real is the data at stitch fix? how valuable is it? katrina: it is so real and incredibly valuable. there are a lot of terms around data. what we are doing is high signal data that people are sharing with us. it pertains to the experience they are having. so people will try things on, try five things on and let us know these are two big, this is , too expensive, i love this but i already have it, i love it in a different color. these are things that people are sharing with us to help us understand what they are liking and not.

100% of the time we know who buys what. we know a 25-year-old woman in louisiana bought these jeans. 85% of the time we know why. she's letting us know, this is too expensive, i love this, and the breadth and depth of that data is incredibly valuable. emily: if you have all this data, do you need all those stylists, or do those stylists go away? katrina: the stylists are a very important part. what that data allows us to do is to be able to have a predictive ability on clothes and people and what is going to happen. we are able to highly accurately predict, this has a 72% chance of working. this has a 38% chance of working. that data is presented to the stylist. the stylist is part of the selection process and relationship building of explaining why she chose things and building that relationship.

one thing that i see a lot of founders do that is part of the problem is they hire their friends and the people they work with. ♪

emily: as the youngest female founder to take a company public in one of the few running a unicorn, do you feel a greater sense of pressure or responsibility to pave the way for other women than you did when you started this journey? katrina: i do feel a responsibility. there was a time a few years ago where i was more averse to being a female founder or female ceo. the reality is that the world needs it now. i think about myself when i was writing business school applications or when i was figuring out who i wanted to be in the world. i'm proud that i can be an example of a different kind of tech ceo, an ipo ceo.

i treat that responsibility -- it is very important to me. emily: you wrote a tweet i loved about the iphone auto suggesting a white male emoticon for the ceo, saying i do not look like this. i look like this. katrina: you have an incredible power now to speak up. how do you use that power? my powers are best deployed -- the biggest impact i can have is by creating a company that has an amazing culture that people love to work at. the people love to be a client of. emily: you didn't always feel like you had the power. you talk about how you heard the investor bragging about his hot tub parties at a conference. talk to me about how you navigated that kind of thing in the early days. katrina: i was exposed to bias, both deliberate and not. i hope those days are far behind

us now. i think there's much greater awareness now of what could have been seen in a tone deaf way. just another way to connect with entrepreneurs. i think today that people recognize that being inclusive and having a diverse portfolio, having a diverse employee base , these are things that are good for business. emily: you reportedly told bill gurley that he had a responsibility to fix what was going on. how do you decide when to press those buttons? katrina: i have a great relationship with bill. i feel like he's somebody that is happy to listen to my very direct opinions about what i was seeing. i have so much respect for bill and benchmark. it was a series of really difficult decisions that they have made in the last year, last

two years. i appreciate bill for his openness and listening to my direct opinions. emily: you had your own me too problem with the investor who was accused by multiple women of sexual harassment and assault. i know that legally you can't discuss it, which is part of silicon valley's problem, forcing people to sign nda's, so these stories never get told. what is your reaction to the broader stories that have been told by women? katrina: the last year has undoubtedly been a big moment of change. there's a lot that has led up to this. in many cases, there were decades of behavior that are now coming out in this last year. to me, i'm more excited about looking ahead. in particular, founders for change and moving forward are two initiatives that i think are really exciting. moving forward is one that

allows people to see the sexual harassment and discrimination policies and have a point of contact. that is something that is a change from where we were in the past. emily: founders for change involves founders agreeing to consider the diversity of a firm when they are deciding whether to take that check. do they have women or people of color? katrina: and importantly says, i'm a founder for change and i'm going to build an inclusive team. the founder is taking responsibility for their team and asking that. this is a massively different environment. people are having the right conversations. there are real protective measures in place. if i reflect on the experience i had founding a company, this is a better environment to do it. i think about what it would be like today and i think it is a lot better. i'm optimistic. emily: you are building a diverse team. you took your full maternity leave. i know that was important to

send a signal to employees. talk to me about how you build that team and what other founders can learn from you. everybody wants to know, how do i do this? katrina: one thing that i see a lot of founders do is that they hire their friends and people they've worked with. being able to have a wide lens for all the hires you are making and feel like you are looking at the broader context and saying, is this the best person for the job, that has been my secret to building a diverse team. emily: i know you are passionate about helping other women find their confidence. what is your advice to those entrepreneurs? especially women entrepreneurs. katrina: firstly, just surround yourself with possibilities. try it. do it. experiment. i believe in so much more possibility now, i've gained so much over the years, and i'm excited to see more women take the plunge.

emily: katrina lake, thank you for joining us. really great to have you. ♪

manus: you are watching "best of bloomberg markets: middle east." the major stories driving the headlines from the region this week. the saudi scandal deepens further. turkey labels jamal khashoggi's death a meticulously planned murderer. president trump calls it the worst cover-up ever. the crown prince mohammed bin salman promises justice. soft smash. the rout that wiped out u.s. gains for 2018 spreads to asia. trade tensions, geopolitics, and rising rates shake investor confidence. and saudi banks have proven more resilient than other sectors in the recent selloff. how is the bank faring? we hear from the ceo. ♪