Stitch Fix made a big addition to its business that won’t show up in its Q2 financial results

How Complete Beginners are using an ‘Untapped’ Google Network to create Passive Income ON DEMAND

The new feature — called Extras — signals where the company is headed.

Stitch Fix posted another profitable quarter with revenue of $ 296 million that beat analyst expectations, but the most interesting company development received just a passing mention in the earnings announcement for the second quarter of its 2018 fiscal year.

That’s because the new Stitch Fix feature, called Extras, just launched three weeks ago so it hasn’t yet impacted the company’s financial performance. But its existence points toward the ambition the personal styling company has to grab more of the money its customers spend on clothing outside of their relationship with Stitch Fix.

Let’s back up for a second. Stitch Fix’s core offering uses a mix of personal stylists and algorithms to select five clothing and accessory items to ship to a customer at a time. Customers pay for and keep what they want, send back what they don’t. But they aren’t selecting what goes in their own box from the start.

The new Extras feature, however, allows customers to choose from an assortment of undergarments like bras and underwear to add to each box of five items their stylist has chosen for them. This might seem like a subtle addition, but it signals a big move by the company to supplement its main business built around discovery and serendipity with a more traditional retail shopping experience.

“By forcing them to go to another retailer to buy socks, there’s a chance they can be lured to buy other things at that retailer,” Stitch Fix CEO Katrina Lake said by way of explaining part of the rationale of the offering to Recode on Monday.

Lake didn’t specifically call out Amazon as “another retailer,” but that e-commerce giant happens to be one of the online companies that has gotten very, very good at selling apparel basics like socks and underwear. And Amazon also has been showing off its ambition in fashion beyond basics by unveiling a wide variety of in-house brands hawking everything from denim to women’s workwear. They are a threat.

Lake cautioned that the “personalization and … the surprise” at the core of Stitch Fix’s offering won’t be going anywhere. But it’s clear the company is thinking hard about the right way to balance the model on which it built its success with the model that will allow it to grab as much market share as possible.

And for good reason. A study from the research firm SecondMeasure found that Stitch Fix customers actually spend more at other top fashion retailers like Macy’s and Nordstrom in the 12 months after they become a Stitch Fix customer than they did in the 12 months prior.

For the second quarter of its fiscal year, Stitch Fix net revenue grew 24 percent to $ 296 million, beating out analyst average estimates of $ 291 million. The company also beat estimates on adjusted Ebitda, but its net income came in below expectations thanks to a one-time tax hit related to the Trump tax plan as well as the re-measurement of preferred stock.

Stitch Fix also issued sales guidance for its full fiscal year of $ 1.19 billion to $ 1.22 billion in net revenue; analysts were expecting around $ 1.2 billion. It also said its full-year Ebitda would come in at $ 45 million to $ 55 million; analysts were estimating $ 51 million for the full year.

Stitch Fix went public at $ 15 a share in November; as of Monday morning, its stock price had risen 52 percent since its IPO.

Recode – All

Cash For Apps: Make money with android app

I can’t stop looking at this wonderfully bad Google Photos panorama stitch

Most times, technology fails and we get frustrated. Sometimes, technology fails in a spectacularly adorable way. Such is the case with this Google Photos panorama image that the software automatically stitched together for Reddit user MalletsDarker, which placed a photo of his friend majestically behind two different photos of snow and trees.

MalletsDarker shared the source images that Google Photos had combined together as a panorama, a feature that the software will automatically offer to you if it notices the images were taken near one another. He took three pictures: one with two friends, one of the snowy landscape, and one of the trees in a distance. In the photo of his friend, Google Photos managed to…

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Stitch Fix’s TV advertising push attracted new customers. One problem: They want cheaper stuff.

So Stitch Fix is giving it to them.

Online personal styling service Stitch Fix stepped up its advertising spending by 84 percent in the first quarter of its 2018 fiscal year, with TV campaigns playing a big role in trying to attract new customers.

But the new customers attracted by the mass-market commercials had one common piece of feedback: Stitch Fix needs to offer a bigger selection of less-expensive clothing. CEO Katrina Lake told Recode in an interview following today’s release of Q1 results — its first earnings report as a public company — that these consumers want more options in the $ 20 to $ 50 price range.

So Stitch Fix plans to give these new customers more of what they want.

“In the last year, lower price point product has grown to represent a double-digit percentage of our total unit sales,” the company said in a letter to shareholders announcing the financial results. “Given the success of this offering, we plan to increase lower price point sales as a percentage of overall sales over the course of this fiscal year.”

In its first few years of existence, Stitch Fix’s selection of clothing items skewed mid-tier — higher than the range mentioned above, but lower than those of premium brands. But in the past year, the company has started to sell name-brands at premium price points, in addition to beefing up the selection in the $ 20 to $ 50 range.

On the company’s earnings call with analysts, Lake was asked what the lower-price push would mean for profit margins. She did not offer specifics on the profitability makeup of the different price points, but said Stitch Fix “can serve very profitably” these value shoppers.

Average order values, on the other hand, would be lower for these customers, but would be largely offset by new sales of high-price premium brands, she said.

For the quarter, Stitch Fix reported revenue earnings and profits that were generally in line with analyst estimates. First-quarter revenue grew 25 percent to $ 296 million year over year, while the company netted $ 13.5 million in net income.

But Stitch Fix’s stock was trading down as much as 12 percent in the after-hours market, perhaps over concerns that the company did not provide a forecast for net income.

Recode – All

Stitch Fix is crashing after its first-ever earnings report

 Stitch Fix’s first earnings report is not going well for the company, as its shares went into a tailspin after a significant run up over the past month following its IPO when it delivered its results its most recent fiscal quarter. Stitch Fix, a personalized apparel company that ships a box of recommended items that users can buy or send back, closed up just 1% on its first day of… Read More
Mobile – TechCrunch

Stitch Fix’s CEO says ‘We’ve been underestimated before’

It’s always been hard for Katrina Lake’s company to raise money.

Stitch Fix accomplished more in six years than most companies do in a lifetime.

But in the narrow world of IPO pricing, its public debut last week did not go as planned. The online retail and personal styling company was convinced it could sell its shares at $ 18 to $ 20, but ended up having to settle for $ 15.

A few hours after the company opened trading on Friday, I visited Nasdaq for a candid discussion with founder and CEO Katrina Lake. Here are some of the highlights:

You didn’t end up with the IPO price you wanted. What do you think happened on the investor road show and what did you learn from it?

Katrina Lake: I’m still processing a little of what I learned. This business is not stores, it’s not regular e-commerce where you are dependent on [search engine marketing] and you put a bunch of things on a website. It’s a totally different model and it requires education and understanding of how the data science is important in the model and how it actually impacts the model. There’s just more time that needs to be spent to understand the specialness of that.

On pricing, we didn’t end up where we had hoped to be. But, at the same time, we’ve been underestimated before. I feel like we thrive being in this position; we’ve never been an overhyped, overvalued company. And so we are very happy to prove ourselves in the public markets and show some good results.

You had originally planned to personally sell a million shares in the IPO, but you’re not. Why?

I’m just not interested in selling at that price. I have conviction that this company is going to be worth a lot more money, and it didn’t make sense to sell at that price.

A lot of people have focused on how little capital you raised (less than $ 50 million) to build this business. Why was that?

To be clear, I didn’t have the luxury to raise a lot, burn a lot. I did not have the luxury in the early days of having tens of millions thrown at me at crazy valuations. We treated every single dollar that we got very preciously because it was very hard to raise every single one of those dollars.

And so, in some weird way, we just missed the trend of this because it was really hard for us to raise money. And then we’re like ‘All right, great, let’s just get a healthy business and be insulated as much as we can from this dynamic that is hard.’

Even your last round of funding in 2014 was hard?

That was an inside round. We had a good valuation that our insiders were giving us. But they were supportive and told me you should make sure you feel comfortable with the valuation. You can shop it and go talk to people.

And we talked to exactly one other [investor] who dragged us along in this whole long process knowing that we had a term sheet at a $ 300 million valuation. They came back and basically gave me a totally insulting term sheet. Like a totally insulting term sheet.

I was like, ‘How can even a good round be hard?’ It wasn’t as hard as being eight weeks away from missing payroll, but there’s still a little bit of feeling like raising money has never been an easy thing at Stitch Fix.

Are you going to name names?

I’d love to, but I’m not. The whole point is, I’m very proud that we’ve had a very disciplined approach, but that was — in the beginning — certainly more of a survival mechanism than a brilliant strategy.

Some people are worried about your decelerating revenue growth. Was it planned?

Stitch Fix revenue and revenue growth

We’ve now grown 25 percent, year over year, for the last three quarters in a row, and we have close to a $ 1 billion revenue base now. We have a disciplined approach to growth.

I started Stitch Fix as a company that I want to work at forever. And so the lens of long-term that I have is forever. And I think this sustainability and discipline is important. That’s not maybe the default today. It’s a choice that you can agree or disagree with, but it has been our choice.

Our marketing spend is very modest compared to other e-commerce companies. Last year it was at 7 percent [of revenue]. E-commerce is at 13, 15, 17 percent. So we’re obviously not maxing out marketing in the interest of maximizing growth.

A lot of women have told me that your IPO is a milestone for them. Do you agree?

It’s true, I’ve gotten a lot of text messages and emails. It’s great that it’s a milestone event, but I just wish there were more. While I feel very privileged to get to see this milestone, I wish that more women did. It’s a challenge in tech and it’s also a challenge in retail.

You look at retail and it’s pathetic. There are so few women CEOs and so few women on management teams.

Boards, too.

Boards, too, in retail. So I hope we can be an example that this is a team that is a diverse team. It’s a company where we have tons of women. It’s a place where that diversity is reflected in our success.

I hope it’s a place that shows a different kind of success. And I hope from a pattern recognition perspective, at the very least, that the capitalist in all of these venture capitalists are at least feeling like even if they couldn’t wrap their head around this idea, that they feel like they missed out from a capitalist perspective.

So I’m proud it’s a milestone but I also hope there are a lot more milestones that we get to celebrate.

Recode – All

Stitch Fix gets a pop in its public trading debut

 Stitch Fix revised where it would price its IPO lower last night ahead of trading, and it looks like it helped approach the right sweet spot as a result when it made its debut today. The company saw around a 15% pop in its stock when it began trading this morning — the benchmark companies tend to look to hit when they go public is around 20% — and fell around the lower bounds of… Read More
Mobile – TechCrunch

Women in tech see today’s Stitch Fix IPO as a milestone

Founder and CEO Katrina Lake is the first woman to take an internet company public this year.

On the day Stitch Fix publicly filed paperwork for its long-awaited IPO, Glossier CEO Emily Weiss had a simple message for the company’s 34-year-old founder and chief executive, Katrina Lake.

So too did Rent the Runway’s co-founder and CEO Jennifer Hyman.

The Stitch Fix and Katrina Lake success story — building a nearly $ 1 billion revenue business with profitability in less than six years — has impressed people all across the tech and retail worlds. But today’s IPO milestone has added meaning for some female founder-CEOs of internet companies who know first-hand the obstacles women still face in an industry dominated by male investors and CEOs.

“I want her to have a huge positive outcome because it does something really important for female entrepreneurs and, specifically, founder-CEOs,” Rent the Runway’s Hyman told Recode in an interview on Thursday. “I want her to have this success because we work in an industry where pattern recognition is still the name of game. So the more people like Katrina — and hopefully people like myself — who deliver results, the more other women are going to get opportunities.”

The Stitch Fix IPO is the first public offering this year of an internet company run by a woman. It also appears to mark the first time a female founder-CEO has taken a consumer internet company public since started trading on the New York Stock Exchange nearly four years ago.

“I admire Katrina not just because she is a female founder-CEO who has built a huge and impactful business in a very short amount of time, but also because she has done it in a very capital-efficient way,” Shan-Lyn Ma, the co-founder and CEO of the online wedding registry startup Zola, wrote in an email to Recode. “It shows us all that there is an alternative path to an IPO than the typical ‘burn money to buy growth’ path to IPO.”

That view was echoed by Eurie Kim, a partner at Forerunner Ventures, who was not an investor in Stitch Fix but who has followed the company closely.

“What’s most notable about the story is that Katrina only raised $ 42 million and was able to lead the business to profitability early, all the while growing revenues at record pace,” Kim said in an email. “That is a true success story that I think will certainly motivate founders, specifically female founders, to take the leap in bringing their ideas to life and be even more ambitious about the full potential that can be achieved with visionary leadership and disciplined execution.”

Lake founded Stitch Fix in 2011 with a new retail model of bringing a personalized shopping experience into the homes of women who didn’t have access to a wide range of fashion options near them or didn’t have the time to shop around. It resonated big-time and, today, the company has around two million active customers.

Stitch Fix’s early investors have also credited Lake with having the vision and capability to hire high-level talent into important roles early on. The company’s current management team includes top executives from Netflix, Walmart and Nike who all joined Stitch Fix back in either 2012 or 2013.

“[T]he thing that leads to really big home runs are the entrepreneurs that have the audacity and capability to go recruit high to build a team,” Bill Gurley, the Benchmark venture capitalist who sits on Stitch Fix’s board of directors, told Recode in 2015. “You’ll hear entrepreneurs say they want to hire people who are smarter than they are, but some of them are intimidated and some of them just can’t close.”

The path forward as a public company will come with more obstacles, though. Stitch Fix priced its IPO at $ 15 a share on Thursday night, well below its target of $ 18 to $ 20. It opened up trading on Friday at $ 16.90 a share, giving it a market value of $ 1.6 billion.

Potential public-market investors reportedly had questions about the company’s decelerating growth and why it needs to employ so many stylists if its algorithms are supposed to be a styling differentiator.

“I think there’s always a learning process that public markets and investors will have,” Hyman said on Thursday, before the IPO price was set. “But I hope that the Stitch Fix story, wherever it starts on Day Zero, continues to go up to the right over the next 18 months as she educates the market and they see how great a business she has built.”

Recode – All

Stitch Fix’s Katrina Lake is the only woman to lead a tech IPO this year

Fewer than 8 percent of all U.S. IPOs this year were led by women.

In 2017, a woman-led IPO is still rare. In tech, it’s nearly nonexistent.

That makes Katrina Lake — the founder and CEO taking Stitch Fix public today — especially notable. Stitch Fix is an online retailer that provides personalized styling services.

Fewer than 8 percent of all U.S. public market debuts so far this year were led by women, up from about 7 percent last year, according to data from S&P Global Market Intelligence. As low as that is, it’s still markedly higher than most previous years.

Stitch Fix is so far the only tech IPO led by a woman this year. The other 11 IPOs led by women in 2017 are predominantly pharmaceutical companies.

The last tech IPO piloted by a woman was BlackLine in 2016, an enterprise software company founded and helmed by Therese Tucker.

From 2000 to 2015, an average of only 4.2 percent of U.S. IPOs were led by women, according to data from sociologist Martin Kenney and economist Donald Patton at the University of California, Davis.

Just 6.4 percent of CEOs at Fortune 500 companies are women. Gender inequality is particularly acute in tech, which suffers from a lack of female representation up the supply chain.

Recode – All

Recode Daily: The Stitch Fix IPO is on — here’s who is likely to win big

Plus, SoftBank may soon dwarf its own $ 100 billion Vision Fund, Alphabet is leading a $ 1 billion round for Uber rival Lyft, and how to hang out with yourself as a kid.

Stitch Fix filed its long-awaited IPO on Nasdaq, looking to raise $ 100 million. The 6-year-old personal styling service and online retailer has 2.2 million active customers; it is seeking a valuation of up to $ 4 billion. Only a few investors held concentrated ownership positions in the company, so just three VC firms are poised to share any big returns from the IPO: Baseline Ventures, Benchmark Capital and Lightspeed Venture Partners. [Jason Del Rey / Recode]

SoftBank could commit as much as $ 880 billion to tech investments in the coming years — a gargantuan, unprecedented amount of cash that would amount to a seismic shift in tech finance. CEO Masayoshi Son — who is already betting $ 100 billion on the tech sector via his Vision Fund — said he is planning a series of investments in young companies. [Theodore Schleifer / Recode]

One of Uber’s first big investors, Alphabet, is putting a big a chunk of money into Uber’s chief U.S. rival, Lyft. Google’s parent company is leading a $ 1 billion funding round that values the Lyft at $ 11 billion; in April, Lyft was valued at $ 7.5 billion. And the super-secret experimental Google X lab, which is developing “moonshots” like internet-beaming balloons and energy-capturing kites, has hired its own Washington, D.C., lobbying company. [Johana Bhuiyan / Recode]

Three senators launched a bill to regulate political ads on Facebook, Google and Twitter. The Honest Ads Act — the brainchild of Democratic senators Mark Warner and Amy Klobuchar, with Republican support from Sen. John McCain — would require big tech companies to make copies of political ads available for public inspection — and disclose who is buying the ads. [Tony Romm / Recode]

Facebook has hit a snag in its effort to help media companies sell subscriptions — Apple. Facebook’s plans to put a subscription tool in its mobile app; Apple wants as much as 30 percent of any subscription revenue Facebook helps generate. In the meantime, Facebook is rolling out a version for Android phones; participating publishers include The Washington Post, Hearst and Tronc, while holdouts include The New York Times and The Wall Street Journal. [Peter Kafka / Recode]

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It’s small, but yet another nod by tech giants to show they care about the rest of America.

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On the latest episode of Too Embarrassed to Ask, Wirecutter editor in chief Jacqui Cheng makes recommendations for smart-home speakers, laptops, Bluetooth headphones and tablets.

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This guy Photoshops himself into childhood pics so he can hang out with his younger self.

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Stitch Fix has filed publicly for its long-awaited IPO

$ 0 to $ 977 million real quick.

Stitch Fix, the personal styling service and online retailer, has filed publicly for an IPO in an offering that will be closely watched in the e-commerce and retail worlds.

The San Francisco-based company registered $ 977 million in revenue in its most recent fiscal year, which ended this summer. It lost $ 594,000 for the year, after two years of strong profits.

Stitch Fix filed to raise $ 100 million in an IPO on Nasdaq, though that number is typically a placeholder. Reuters previously reported that the company would seek a valuation of $ 3 billion to $ 4 billion.

The 6-year-old online retailer, founded and run by 34-year-old CEO Katrina Lake, struck a chord with women who are too busy to shop for clothing regularly, and those who simply prefer an affordable stylist service.

Customers fill out a survey about their style, and pay a $ 20 styling fee upfront. Stitch Fix then sends them five items — a mix of clothing and accessories — that aims to match each customer’s taste.

Shoppers keep what they like and send back what they don’t. The $ 20 styling fee can be used toward any item kept, and a 25 percent discount is given to those that purchase everything in the box.

Stitch Fix runs a large data-science operation, which the company says helps it make more accurate styling choices for customers, and also helps it create its own clothing that matches up with current trends. You can be sure that the company will pitch this to investors, and will make an argument that it should be valued higher than a typical retail company as a result.

“Our data science capabilities fuel our business,” Stitch Fix says in the filing. “These capabilities consist of our rich and growing set of detailed client and merchandise data and our proprietary algorithms.”

The company got its start selling women’s clothing exclusively, with a mix of its own private-label brands as well as those from other companies. Last year, it launched a men’s offering, and recently added more inventory from higher-end women’s brands.

For an e-commerce company of this size, Stitch Fix raised relatively little money — less than $ 50 million from a group of venture firms that included Benchmark and Baseline. They will be big winners when the company goes public.

While the company grew to nearly $ 1 billion in revenue at a fast clip, its growth is slowing. Revenue grew 33 percent year over year between its 2016 and 2017 fiscal years, down from 113 percent between 2015 and 2016.

Recode – All