Gwyneth Paltrow x Katrina Lake: Allowing Yourself to Hold a Big Vision

23:20And like, if I didn't sell the thing, I would like go back and return it. I know. No, it's amazing. What? This is great. This is like innovation. Like I've never heard of. I love it. And so I had like a credit card with like a$6 ,000 limit that like I was always having to manage that limit. And that's how I was doing that in the beginning days. So I wasn't making money doing that to be clear, right? Like I'm buying it from the boutique and then I'm selling it to people for the same. So like, I wasn't even making money doing that, but at least it was proving to me like, oh, this could work. Or like, you know, this part doesn't work.

23:53And then when I went to raise money in 2011, like got a term sheet actually was on Valentine's day of 2011, got a term sheet, but like from Steve Anderson, who is baseline venture. So he's like an angel, you know, this was back in the day when you could start a business with like less than a million dollars. It was like a$500 ,000 term sheet. It was great. And this was in 2011. But you know, what's funny is like, they say we're going to do this. And then the money doesn't hit your bank until like months later. And like, I don't think I fully understood that. And so like, I'm like, oh, we got a term sheet.

24:25We're good. We're off to the races. So we started buying inventory. And then I realized like, oh, like, I don't, I don't have a corporate card. Like I don't even have a corporate bank account that has any money in it yet. And so I was basically like spending my money on rent, like the day when the funding hit from Steve, like if the funding had been like a couple more weeks, I was going to have to go like ask people for loans. Like I was like spending my, you know, rent money to kind of pre-fund the business. And then I had to go to Steve afterwards and be like, Hey, like, just so you know, so you don't think this is sketchy.

24:54I've incurred these business expenses before the money funded. So now I have to reimburse myself. And it sounds weird that I'm going to have to write a check to myself from the company account, but like, just so you know, here are the receipts. And he was like, it's totally fine. Those are all the kind of you know, moments people don't really talk about. Incredible. So people ask us all the time, like, how do I grow a business? How do I start it? How do I get it in front of somebody? And it sounds like it was really effective for you to prove your case, even, even in a small way, but you, you did prove enough that there was product market fit, even if it was just like in a few people?

25:33In retrospect, like, I don't even know that the data that is that compelling, but probably what is compelling about it is like showing like, oh, you can get something off the ground. You're willing to do the work. And like, you know how to think about data. Like it was obviously a super small sample set, but also a little bit me. I'm more risk averse. Like I want to know the data. I also, I had alternate career decisions that I could have made. Right. And so like, I felt like there was opportunity costs. I'm like, if I'm going to do this crazy startup thing, like I better really believe it. And I better like really, really know there's a business here.

26:03And so I was definitely doing the work to prove it to a VC, but I was also proving it to myself because like I could have gone and taken, you know, some other corporate job. Did you get a bunch of rejections when you were getting that, looking for that? So many. Oh my gosh. I have like a spreadsheet full of rejections. I found that when I went out to start raising some money for Goop, and obviously it's different Cause like I didn't go to HBS and Stanford and I had had this career as an actress. So I, I understand why people were skeptical, but I did find that a lot of these, I would go into these rooms, you know, on Sand Hill road and the guys would be like, Oh, my wife, you know, really likes you or she reads goop.

26:47And can I get a selfie with you? I love, you know, the Royal Tenenbaums. And then that was it. Like I didn't get funded. And at a certain point I thought, you know, that I understood, but once the business is actually growing and our unit economics were good, I still had a really hard time. I still had a hard time explaining to men, like what the value of Goop was, for example. And sometimes with some of our friends and colleagues who are running businesses that are by women for women, I feel like almost like there's a discount or we get dinged or it's harder. And so I, was that your experience at all?

27:26That resonates so much. I had so much of the same experience without the selfies. Nobody wanted a selfie with me. It's hard to unpack. I remember I had a VC who I, I mean, I really respect this guy, but like, it was really one of the hardest rejections to your point. It was like the business had traction. Like we were like, I mean, we were growing without marketing spend. Like the economics were great. The contribution was great. Like, I mean, everything about it was great. and you know we got to the final round we came into the presentation of the partners and like at the end he was like look like I love my job I love being in BC like blah blah he's like at the end of the day I only get to take like one or two board seats a year and he was like and I just like I want that to be a company that like I go to sleep thinking about and I wake up thinking about and he was like I just can't feel like I'm gonna like go to sleep thinking about like women's clothes and waking up thinking about women's clothes and I was just like oh that cuts so deep it's not enough for me to find like that my business is working.

28:23It's like, it's, that's not enough. Like I have to find someone that like is, is deeply passionate about like the specific thing that I'm selling. And to be clear, like, you know, it's on me that it could have been more about personalization. It could have been more about whatever, like I could have probably told a more compelling story in that way. But you know, he was, he was just like honest enough to admit that to me. But I think lots of people think that way, you know what I mean? Where it's like, they are going to be spending their time on this category and on this business. And as long as we have the dynamics that we have around people in positions of control over capital, that type of bias exists.

28:58And in the same vein, a few years later, a reporter told me that he would ask VCs, which company did you totally miss on? And Stishvix was the number one company that he would hear. And I was like, that's great. Is it? I don't know. Is that a compliment? Is it not? Like, you know, it's so frustrating because I think people can both see that they're missing the opportunity and people know that. And at the same time, I think there is something that's like that's in all of us. Right. Maybe I wouldn't be that excited to like fund something that has less to do with me personally. You know what I mean?

29:30Like, I think I can understand that. But that's also why representation is so important. It's just like we don't have representation, which is not just about gender. I mean, it's about all types of it's like, you know, it's about people, what type of backgrounds people come from, like people who come from like rich families and people who don't like people who obviously come from all different parts of the world, people who come from, of course, all different ethnicities, like all of that representation matters because there just is a lot of bias that is happening. even if people don't want to admit to it, that is leading to it being more difficult for underrepresented people to be able to get the funding for their companies, even when their companies are working and the business is good.

30:12It's just like, it's a really frustrating dynamic. Yeah. It's also pretty, it's like in that situation, that guy is like, it's also important for diverse founders to have that voice on the board as well, right? I don't really get it. So what about this? And what about that? I'm not the customer. So like, but I'm seeing this in the data or that, you know, that's important for us as well. A hundred percent. And to be clear, like, you know, I've been very lucky that like, I have like the two primary investors that were investors in Stitch Fix are both men who act like that, but also like now they can be part of the business.

30:52we have a men's business and they definitely got excited about other elements of the business. And I have men on my board who have been great contributors and, and get it. But I mean, that rejection in particular was just a really rough one. Cause I was like, Oh wow. Like I, what else can I do? Like. TikTok for business is helping owners like you reach new customers every day. We saw up to a 10 X return on our TikTok shop ads. A few years ago, I started sharing my love for fashion on social media and Willow Boutique was born. We're not just a place to shop. We've really become a community. TikTok allows us to find more people to have that great experience.

31:30I cannot imagine my business without TikTok. It's completely changed my life and I could not be happier. Head over to getstarted.tiktok.com slash TikTok apps. Did you ever have moments of doubt when you were growing this huge company? Were you like, what the fuck am I doing? Like, how did I get here? Like when you're at, you know, hundreds of millions of dollars in revenue, did you ever have those moments where you were like, how did this happen? Or were you just like super confident? I mean, I'm, I'm having a moment like that right now, sitting across from you, GP. Like there's so many pinch me moments that I have along the way, because there's like lots of points in time where I was like, what am I doing?

32:11I've never done this before, but I will say that like, you know, one of the things that has been really positive about like, a community of, it's not really even just women, but like certainly the, you know, female CEO community, like there aren't a whole lot of us who are publicly traded company CEOs and founders and, and we're close. And those are people that I feel like I can talk to really candidly and that we're all together. You're, we're all figuring it out. And you realize that. And I would say that even as we were going public, there are a couple public company CEOs who like got my cell phone number and texted me.

32:43And we're just like, Hey, like, I know this week is intense. We had the same thing with blah, blah, blah. And like, people are just like reaching out and offering to help. And so, you know, I would say that, like, there's so many moments where I felt like I don't belong or like, what am I doing here? But I think at the same time, I've also been really lucky, I think, of like being able to also have these, these points of reference where people are really vulnerable and people are really open and like, where, you know, I think I can feel like I have my own self doubt, but then I also get to see that reflected in somebody else that I see as being like amazing.

33:13And so I don't know. So I feel like, yes, but I think at the same time, I feel just like so extra grateful, I think for the people who along the way have shown me vulnerability and reached out and like, you know, helped me to see that. Like, yeah, I didn't feel like I knew what I was doing, but that like lots of other people feel the same way. Who's on your short list of people that you call? Whitney from Bumble for sure. and actually like Sarah Fryer was somebody who like, I feel so indebted to her. Sarah Fryer is the CEO of Nextdoor. She had been the CFO of Square and like I really had only met her once or twice, but like Square had had a very challenging IPO and then they came out of the IPO and things were great.

33:53This was like so long ago. Now Square is called Block. But I remember she had told me that story. And so like the night with the IPO, like everybody thinks of the IPO as being this like big happy moment. And like, it was really stressful. Like for like a week, we went out and did a roadshow and the roadshow was like not all that successful. And like, you know, we were going to price below the range. And, you know, it felt disappointing when it really should have felt positive. And like the night before the IPO, like I called her in my hotel room and I was like, I'm so sorry, do you have time to talk tonight?

34:21And it was like 11 o 'clock where I was, but I was on central time. So it was probably nine o 'clock in California. And she was like, of course. And so I called her and I literally called her crying. And I was just like, you know, this week's been so hard and it's so hard to get investors understanding and interested in our business in 45 minutes and we're not overbooked or whatever. And like, we're, we're going to price below the range. And I was just like, I literally called her crying and I'd only met her like once or twice before. And she like picked up my phone call, like talk through everything with me and just like, you know, said all the right things.

34:52And like, I was able to go into the next day, really like confident and optimistic and all the things. And like, I credit her so much for that, just for even like picking up my phone call in the first place. And And so those are two people that come to mind quickly, but I feel like I'm doing a disservice to like the many, many other women who have helped me and men too, who've helped me along the way that have been a phone call away and have been able to, you know, provide words of wisdom or sometimes just listen when I need it. And I want to talk about the moment you went public because it was so iconic and iconoclastic.

35:28You were holding your baby. How old was he? He was one in change. So he was one in a little bit. So like baby toddler. Yeah. When you rang the bell and everyone was like completely marveled at it. And I think if I'm not mistaken at the time, you were the youngest female ever to take a company public. Is that correct? Yep. And then Whitney would come. And then good old wit came after. And she broke your record, didn't she by a little bit? She did. I was very happy to pass the torch. No one better to pass the torch to. That's true. So will you tell me about that moment where people like, wait, you can't bring your baby?

36:09Did you get pushed back? Tell me about that. You know what's so funny is that like it actually links to that call with Sarah Fryer. And I wish I could remember like exactly what she told me about. What I took away from her pep talk was just like, you have a lot to be proud of. Like, this is your moment. Like, tomorrow's going to be a great day. And like, in the long run, it's not going to matter what the price was today. That was kind of what the takeaway was. And the way that came to life for me was I was like, we're going to do this our way. And so like when you do an IPO, it's like a wedding.

36:39You take this picture, then you take this picture, then you take this picture, and it's this team and blah, blah, blah. And I was just like, you know, fuck it. Like we're all getting on the stage together and including my like toddler baby was being actually like very well behaved and easy. And I had done like some opening statements with like him on my hip while he was like eating a bagel. And like, and somehow like, and that was meant for just like the internal audience and like, and that went great. And so I was kind of like, I want him up here with me. And so then like my husband came up and, and that was it.

37:10And honestly, it kind of was because like things weren't quite going the way that we'd hope they would go the week before that suddenly I felt super empowered to be like, well, like this is the full me. This is exactly, exactly. And it's just like, you know, we're going to do things our way. And like, this is the way we're going to do it. And so that happened the day of like, that was not planned. Like there was no even seed in my mind that like, this is going to be something that could end up being on Twitter and, you know, retweeted and all the things. And like, that was never at all the intention.

37:43It was important to me to be able to share that moment with all the people that I really cared about. And it was such a deeply inspiring moment. And I love those moments in culture where women decide to do something, whether it just sort of happens or not where everyone kind of reframes the way they think about something, you know, you get like a recalibration. It was definitely one for me. I definitely, I didn't know you then. I was so psyched about that moment. And it's so funny because it's not even about the IPO that feels so emotional to me, but like the fact that that picture was so meaningful to people, like still like means so much to me that I got the privilege to be able to be part of that for people is just like, I mean, a great honor.

38:25So you somehow miraculously got the company through COVID and then you decided to step down. Was it in 2021? Yes, it was August of 2021. And what precipitated you feeling like you could step down? Were you like, I'm done. I did what I came here to do. I mean, it had been a crazy 10 years, right? Like a crazy 11 years. and I felt really proud of what I had done. I felt super excited about what the capabilities we had and what the company could do in the future. And I felt a little bit of like probably apprehension around like, am I really the right person to lead the next chapter? And then candidly, I also probably felt, I mean, I don't even wanna say burned out because it's not like I was like so burned out that blah, blah, blah.

39:16But I just felt like I didn't have like the appropriate level of energy kind of that like was needed for the next chapter. And like, I wanted to have, like I could remember what it felt like in those early years of Stitch Fix when I was like on that 6 a.m. bus and super excited to be doing this and that and blah, blah, blah. I would have moments of excitement for sure, but I just didn't feel like I could bring that every day. And so it was probably like kind of a combination of those two things that led me to look for a new CEO then and bring somebody on. And then now as, you know, we're kind of in the same situation now where I'm in CEO again, but I'm interim.

39:53And I would say that now I really feel conviction that like, you know, it's both of those things, but I also feel like I've been meeting people that, you know, can be our potential next CEO. And it's been really, really inspiring to be able to see kind of what the level of talent that we can get and what that could mean for the next chapter of Stitch Fix. And so I'm really proud of what I did in the first 10, 11 years. And at the same time, I'm super excited for another leader to be able to take the company forward into the future. Was it hard for you to step back in? Yeah, kind of. There's a lot of apprehension.

40:26And I was just like, how much has changed? Has the culture changed? Like, have the people changed? Like, what is this going to be like? Am I going to be able to get back into the swing of things? And I would say that actually, mostly there were like a lot of really positive surprises. Like there were a lot of people that were hired while I was gone. And like, these people were fantastic. I came in wondering, like, is this going to feel like my team? Am I going to feel like this is my company? And like, you know, it really did. And I think like it was really powerful to see like how the culture of a company just continues to live on, right?

40:55What would you say are the things that need to be set up in order for like a founder's vision to carry on after they go? How does the soul and heart and mission of a company, how can it stay and be amplified without the founder there? I mean, first of all, no matter what it is, the culture of a company is strong. And I think like, in some ways, pretty hard to change. And I think with Stitch Fix in my kind of early days, like we were really good about being really clear about what the culture was and having a set of practices and just like ways that we brought the culture to life and everyday things.

41:33And I would say that even like that, that culture, I was very surprised to find like largely still existed. And, you know, even without me, like the culture, like the vibe, like the types of people we brought on, like all of that still felt like it really had continued. You know, I think the part that like, and this is really less about the founder, but I do think, and to be clear, I wish I've done a better job of this more recently, too. But I do think like the connection to the client and the business is the part that you really do have to like, keep on practicing when you're looking at numbers, and you're looking at dashboards and whatever, I think it can be easy to like, not be thinking about how those numbers are the accumulation of 1000s and millions of people and the actions and experiences they have.

42:15And so, you know, I think there are things just around practices around how do you bring forward the client experiences? How do you, like, I was just showing you a fix, like I style fixes. Like I, how many of those do you, are you currently doing? I style, if I'm honest, like one or two a week, I can go back and look at my stats. So fun. It is really fun. And you get feedback from these clients. I got feedback. Like last week, I got feedback from the client was 17 years old and her mom, like she wrote and her mom popped in. Oh my gosh. It was so sweet. She's like, wow, did you nail this for her?

42:48The shorts and jeans are amazing. It's hard to find a good fit for her. She looks fantastic on the tops and then all caps. Thank you. Like I really like almost cried. I feel like anytime I have a bad day, like that's what I like to do. I like to go back and read those. And it's a reminder that like, Hey, we have a real impact on people's lives. You have to nurture both the company culture and also that connection to the business and the client. I think that both of those things like absolutely can live on without the founder. I think it is about like, how do you build the daily practices? It used to be like a thing that like everybody at the company should be styling fixes and you're connected to the stylist experience and you're connected to the client experience.

43:22And as we think about like performance reviews, we look at those through the lens of our culture. And so, you know, I think you can set up ways in which you're making the culture, not just words on a page, but actually manifesting those into behaviors and practices. And - Oh, is it like you have sort of a manifesto? Do you have, you know, pillars, your values? Like, how do you execute that? Yeah, I mean, it is like it is having values and then having practices that like kind of live through those. I mean, things like performance reviews is an example. When I was running the company, like one of our values is responsibility.

43:56And like, if you think about responsibility, it means like I'm responsible for my own development. I'm responsible for my own growth. And so what would a performance review look like in that world? You probably would be gathering your own feedback and you would actually be like developing your own plan for growth and you wouldn't need a performance review to tell you those things. And so like it's like that's like an example of one of those like values that turns into a practice of just saying like, OK, if everybody is fully living responsibly, actually like they're self-generating reviews. So they're actually going to their peers and asking for feedback and then figuring out what their development plan is and then sharing that back with you.

44:31Were people like really honest with one another, colleagues, like at the same level and able to give constructive feedback? And that's a great follow-up question. And so we trained people in sharing feedback because it was, we found that like for some people it was great. And for some people it was challenging. And so we had a whole training around feedback about how to receive feedback, how to give feedback. It wasn't perfect for sure, but I think that's a good example of, you know, how do you look through the lens of your values and think about what are the things that we do every day and like are the things that you could do differently for your company because you have different values than another company and how can you know how can those come to life i'm done with subscriptions streaming fitness razors vitamins i've got subscriptions for everything in my life they lock you in and half the time i can't figure out how to unsubscribe that's why i'm so excited about the new blue apron now you can get delicious meals delivered with no subscription needed including new pre-made options keep the flavor ditch the subscription get 20 off your first two orders with code apron 20 terms and conditions apply visit blueapron.com slash terms for more did you learn anything about yourself through this process like not as a business leader not as like oh i can operate better if i do this but through the process of building a company did you ever have a moment where you're like, wow, you know, I'm, I'm conditioned to be a person who does this and I'm holding myself back in this way.

46:00Like, meaning did the business reflect back to you an area of personal growth that you were able to, you know, understand and learn from? For me, I really do think it's like my main learning was really around leadership. I never really thought of myself as a leader. Like nobody ever said to me like, oh, you're going to be like a CEO someday, or you're going to be like a president someday or something like no one ever said those things to me. I never identified that way. And so, you know, my style is like, you know, I say the word like a lot, like I'm very conversational. It never occurred to me to try to like pretend to be a quote unquote leader just wasn't even something I tried to do.

46:39And so anyway, I think very early on, I realized that like, actually, like the way that I talk and the way that I connect with people, it actually is leadership. It's just like a very different kind of leadership. And now, you know, we associate that with like vulnerability and connection and all those types of things. And like, I think for a while, I kind of saw it as like a weakness that like, I wasn't a traditional leader and I didn't show up in whatever way and people didn't experience me in a leader way. And then what I learned like a few years in was like, it was, it was actually a superpower because it really allowed me to be able to build trust and connection with people really quickly because I was able to show up in a way that people can connect with and people can, you know, feel like we know each other really quickly.

47:24And, and so anyway, so I think like, just really being able to understand that, like my lack of leaderiness and, you know, kind of relying more on vulnerability and just being what I know how to be, which is myself was actually a leadership skill and one that actually I could develop and hone and, you know, really make a superpower of mine. That was like a really interesting revelation for me, I think. And, and, you know, over the years I've kind of doubled down on it. I like that I can have paved my own path of like, this is what a leader looks like. And that I don't look like, you know, like a dude in a suit.

48:00Yeah, totally. In such a beautiful way. And I swear, I'm going to let you go soon, but I just want to know how, how comfortable you are with having difficult conversations at work? Like if somebody is not performing or they're disappointed because they, you know, wanted a change in a role or more responsibility allocated to them and they don't get it. Like, how are you with that? And what are your tips? Actually in business school, we did like you could second year, you could like make up your class and do it with your friends and do like a thing. And my friends and I did a class called difficult conversations where we literally acted out difficult conversations and we had like materials and like every week we would get together and we had these two chairs and we would like literally act out difficult conversations.

48:51And I mean, I don't even know that we realized at the time, like how important and valuable that was. Like, I think if you're in the practice of sharing feedback, like you're actually always in direct conversations. And so if you're sharing feedback frequently, then like the hard thing to say is actually not that hard because you've actually like talked about it a few times. And to me, to be able to have the most direct conversation and then to be able to, at the same time, be empathetic and be able to see things from somebody else's perspective and be able to have that in the back of your mind.

49:22Like the honest truth is like, I've had so many of those difficult conversations and like, you know, some of them were like a little sweaty in the moment, but like, I don't look back. I mean, maybe there's a couple, But most of them, I don't look back with any regret. Like I think, you know, most of the time, like at the end of the day, it might be talking about like, okay, it's the right thing to part ways and like, you know, blah, blah, blah. And it turns out like it was the right thing to part ways. And I think also like for me to be able to think through too, if somebody's, you know, kind of skills and hard work is not translating to value here, like I'm like diminishing their career by keeping them here.

49:59Like, because there are other places and other opportunities that might be a better fit for like what they can bring. I do think having a lot of experience helps with having difficult conversations. They can still be painful in the moment, but I also think like, I always remind myself like you having the conversation is so much better than not. Okay. So final question for you. You're looking for a CEO to fill your shoes at Stitch Fix. And then what is going to be next for you? That's a great question. You know, honestly, like I have some board seats. I'm nominated to join the board of Recruit Holdings, which is actually a holding company that's based in Japan, which owns Indeed.com, among other things that people might recognize.

50:39So I'm really excited to have some experience with, I'm half Japanese. And so this gives me the opportunity. And you speak fluent Japanese, which I feel like a lot of people don't know. That's true. A little rusty, but technically fluent. And so I'm really excited about that and the opportunity to learn more about kind of a business and international context and Japanese corporate governance and all that kind of stuff. And I'm also on the board of Glossier and of course with Stitch Fix. And so, you know, I have enough board stuff right now that keeps me like excited and engaged, but I don't know, like stay tuned.

51:11Like I'm, I just turned 40. I'm like, you know, too young to retire. I'm not retired. And like there, there will be another chapter of my life, but I also like, I just, you know, I want some space. My kids are young. They're like six, four and one and a half, almost too. And it's like a pretty fun, although crazy hectic, but it's also a fun time to spend time with them. And so, you know, I'm just kind of looking forward to having a little bit more flexibility in my life and, and there'll be another chapter someday, but I have no idea what that will be. Oh, great. Well, I love once again, that you're, you know, cutting your own path and the way you're doing this.

51:47And it's so great. I have so, so much admiration for you.

51:56Thanks for tuning in to today's episode with Katrina Lake. If you're curious about Stitch Fix, head to stitchfix.com. Thanks for tuning in. This has been a presentation of Cadence 13 Studios. I hope you'll listen, follow, rate, and review all of our episodes, which are available for free on Apple Podcasts, Spotify, Odyssey, or wherever you get your podcasts.