Katrina Lake – The Next Wave of E-Commerce

**Patrick O'Shaughnessy** (0:00)
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Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, methods, stories and of strategies that will help you better invest both your time and your money. You can learn more and stay up to date at investorfieldguide.com.

**SPEAKER_2** (1:17)
Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (1:42)
My guest today is Katrina Lake, the co-founder and CEO of Stich Fix. Stich Fix is a multi-billion dollar public company which has brought an entirely new model to retail apparel by combining data science, technology, and personal stylists to create a unique shopping experience tailored to the individual consumer.
I first met Katrina through past guest Bill Gurley and have been excited to host her since that first meeting. In this conversation, Katrina and I discuss all aspects of Stich Fix, its history, business model, innovations, and its future. Please enjoy this great and thought-provoking conversation with Katrina Lake.
Katrina, I've been really excited to do this with you because the business that you've built occupies a space that everyone understands, which is the world of retail, clothes, e-commerce, something that's become increasingly important, especially during COVID. I thought a neat place to start before we get into the nitty-gritty around Stich Fix specifically is with the e-commerce landscape. I love reading in the most recent annual report to shareholders about this next wave of e-commerce that you've envisioned and helped usher in. Could you outline your take on where we stand in e-commerce and what the future might hold?

**Katrina Lake** (2:51)
That's a great question and thank you for having me. The crux of this is part of the origin story, really, of how I got so excited about the space. And to your point, I think from a cursory consumer perspective, I had always been interested in this space. And as I learned more about the business of apparel and the e-commerce penetration was stunningly low, sub 20% when I started the business, and going into COVID, things will change quite a bit. But even before COVID was hovering at that 20% level, and I thought what was so interesting was it was this category that everybody really understood.
And yet, the core problem that you're trying to solve in apparel is you're not going to buy it unless the clothes fit you, unless you love them. Ultimately, how do you find the things that you love out there?
And lots of people were looking at angles around, how do I find the coolest people to wear it so that you might be convinced to like it? Or how do I have the cheapest product? And nobody was solving that core problem of how do I actually identify the clothes on this planet of the millions of things out there that you specifically are going to love. And that's true broadly, not just e-commerce, but also in stores. And I think that was a big part around why apparel was so under penetrated in online. What's interesting right now about this time period is that e-commerce was growing and growing and growing and growing before this time period. And especially in apparel, a lot of the traditionally brick-and-mortar players who had really won market share by having the nice corner lot or by having the best location in the mall.