Small Bets: One leg at a time

“When you’re doing something no one else is doing, you’re either the smartest or the stupidest person in the room,” said Katrina. She would know.

Katrina started her career working for a management consultancy. One assignment was for an apparel emporium. They wanted to improve the shopping experience.

Lake suggested to create a store that was half museum, half warehouse. Shoppers could scan items in the museum section while the warehouse collected, sorted, and stocked those same items into a dressing room. When she presented this idea, “People looked at me like I had seven heads,” Katrina recalled.

From there she moved to Venture Capital. Which was great, except it was in 2007. By 2009 she’d enrolled at Harvard. It wasn’t because VC was barren, but because it was a void. “I didn’t need to be in the peanut gallery lobbying my ideas at other people, I could just do it myself,” Katrina explained. An MBA seemed like a nice small bet.

She kept having these seven heads ideas. One was for clothes. Katrina is only 5’2” and her sister - a clothes buyer - would periodically send her outfits. One day she wondered if she could do that for other people. Katrina said:

“I was buying inventory from boutique stores in Boston and would keep track of their return policy. Then when someone would fill out their profile I would put together a box of things that were relevant based on what they shared in their profile. If they liked it they would write me a check. If I didn’t sell it I would return it.”

Katrina’s small bet was an MVP. “I wasn’t making any money, I just wanted to see if this would work.”. Slowly, it worked great. From her first shipment in 2011 through November 2017, when Katrina Lake rang the Nasdaq opening bell bell, Stitch Fix has grown from a small bet to social success.