44
◼SOLUTIONS BloombergBusinessweek June 17, 2019thuscanthrowaroundtermslike“multivariateregres-
sion”in thesamebreathas“scallopededge.”Ina con-
sultingjobaftercollegethatinvolvedworkingwithEBay
Inc.,shesawhoweventhebiggesttrovesofstatistics
lackedpowerunlesstheywereorganizedandanalyzed
therightway.“Theyhadjusttonsandtonsofunstruc-
tureddatathatwasreallyhardtoparseoutandmake
useful,”shesays.“Itwassohardtounlockit.”Bythe
timeshestartedStitchFixinherCambridgeapart-
mentwhileanMBAstudentatHarvard,sheknewshe
neededtoplaceasmuchemphasisondataasonstyle.
(Aco-founder,ErinFlynn,suedthecompanyin2012,
allegingbreachofcontractandwrongfultermination;
thecasewassettledin 2014,andFlynnis nolongerwith
thecompany.)
Fromitsbeginnings,StitchFixgatheredinformation
thatmattersaboutcustomers,saysChiefOperating
OfficerMikeSmith,a Walmart.comalumnus.“Theygive
usdataabouttheirbrasize,”hesays.“Theygiveus
dataabouthowa pairofpantsfeelsontheirthighs.”
Tidbitslikethathelpthecompanyrefineitstakeon
whatwilldelightcustomersandkeepthemcoming
backandspendingmore.
StitchFixdoesn’tdefine“high-qualitycustomers”
byhowmanytimesa yeartheyshop,butbyhowmuch
theyspend.Thecompanyaimstoboosttheaverage
annualspendpercustomer:It’s$467today,upfrom
$443sixmonthsago.Thatfocusoncustomerspend
perorderwasonereasonforStitchFix’sexpansioninto
theU.K.earlierthisyear,itsfirstforayoutsidetheU.S.,
despitetheuncertaintycausedbyBrexit.Peoplethere
purchaseconsistentlyonlineanddon’texpectthesame
deepdiscountsU.S.customerslookfor.
Anotherchallengetoenticingcustomerstospend
morecomesfrommanagingthephysicalsuppliesof
theproductsthealgorithmsrecommend.“Inventory
flowsSUCKandnoonecares,”wroteoneCleveland-
basedstylistearlierthisyearonworkplacereview
siteGlassdoor.Thecompanysaysit’stakingstepsto
improvetheavailabilityofpopularclothing.
Astothefearofretail-killerAmazon,Lakehasin
thepastspokenabouthow,despiteitsmillionsofavail-
ablepiecesofclothing,theonlinegiantcan’tfigureout
whichgarmentsarebestforeachcustomer.That’sa
problemStitchFixsolves,shesays.Usually,sheleaves
theAmazon-bashingtoSmith.“We’renotin thecloud,
we’renotin logistics,we’renotin moviestudios,”hesays
in a not-so-subtlejabathiscompetitor’smanybusiness
lines.“Deliveringagainstexpectationswillcontinueto
helpwiththestory.”�SarahMcBrideIn1991,StefanPierertookoverKTM,afailingAustrian
manufacturerofmotorcyclestryingtocounteraggres-
siverivalsfromJapan.A no-nonsenseturnaroundexpert
whoatage 35 hadalreadyrevivedandauctionedoff
makersofskibootsandbuildingmaterials,Piererfig-
uredhe’dspenda fewyearsfixingKTMbeforemoving
ontothenextchallenge.Fastforward 28 years,andKTM
is buildingasmanybikesin a weekasit didin thewhole
yearwhenPierertookover.It justsurpassedHarley-
DavidsonInc.astheleadingmotorcyclemakeroutside
ofAsia.AndPiereris stillin charge,witha fortuneval-
uedatmorethan$1billionthankstohissuccessatKTM.
“Thequalityatthetimewassopoorweweremocked,”
hesays.“Buteverycrisisis alsoanopportunity.”
KTMis nowgunningtobecomeoneofthetopthree
manufacturersof full-sizemotorcycles.Inthepast
decade,Piererhasmorethanquadrupledsaleseven
astheEuropeanmarketfortwo-wheelersshrankby
14%.Hesaysnewdesignsanda greaterfocusonAsia
willhelphimreachannualsalesof400,000by2022,
whichwouldputhimwithinstrikingdistanceoftoday’s
No.3,KawasakiMotorsCo.
Still,bymanymeasuresKTMremainsa bitplayer.
Althoughlastyearit sold261,000bikes—35,000more
thanHarleydid—theAmericancompanygeneratesthree
timesKTM’srevenueof$1.75billion,becausemostof
itsbikesarefarmoreexpensive.Includingsmallermod-
elssuchasmopedsandscooters,KTMis stillbehind
PiaggioGroup(themakerofVespa)in Europe.Andglob-
allyit’sanalso-ran.HondaMotorCo.,forinstance,sold
20 milliontwo-wheelerslastyear,andNo.2 Yamaha
Motor Co. sold5.4million. Beingbased inEuropeTHE BOTTOM LINE Like Netflix, Stitch Fix looks at a user’s detailed
attributes to come up with sometimes unexpected choices. Customers love
its selections, but investors may still need convincing.An Austrian
Dirt Bike
Maker Goes
Global
After overtaking Harley last year, KTM
aims to pull ahead of Kawasaki
to become No. 3 in full-size motorcycles