15 Mar 2010, Posted by admin in 20 Questions,Fashion, 0 Comments

20 Questions With Rent-the-Runway

Think of Rent the Runway (RTR), an online dress rental business, as the Netflix for party dresses. Thanks to this startup from co-founders Jennifer Fleiss and Jennifer Hyman, the latest designer threads can now be yours to rent and wear for that special night out (and then returned in a pre-paid package the next day). The service will bring you one step closer to mimicking Carrie Bradshaw’s wardrobe options without breaking your wallet. In this edition of 20 questions the two Jennifers share insights on their business, offer some great career advice, and demonstrate the positive impact that RTR can have on fashionistas, designers, and retailers alike.

Jennifer Sung: Can you briefly share your educational and career background before you launched Rent the Runway?

Jennifer Fleiss: I graduated from Yale and afterwards, I worked at Morgan Stanley and Lehman Brothers in their Strategic Planning group. I was basically an internal consultant, looking at strategic growth opportunities for them.  Afterwards, I attended Harvard Business School where I met my co-founder Jennifer [Hyman] who had previously graduated from Harvard College and worked in ad sales at Starwood Hotels and the WeddingChannel.com.  We were always aspirational entrepreneurs and became good friends in business school.

JS: So neither of you had a background in fashion then?

JF: Right, neither of us had a background in fashion. Jennifer Hyman worked briefly at IMG in their fashion division but we both grew up in New York surrounded by Bergdorfs, Barneys, Bloomingdale’s, etc. It [fashion] has never been an innate interest of mine per say. I think it is super fun, but at the end of the day, we do not consider ourselves a traditional retailer. There are a lot of other elements that matter on a business front to our company.

JS: Where did the idea for Rent the Runway (RTR) come from?

JF: During Thanksgiving break, Jen’s little sister had a wedding to go to and was looking through a closet full of clothes thinking, ‘What should I wear?’ And that led to a series of brainstorming sessions. Rent the Runway is what came out of it.

JS: Both of you graduated from Harvard Business School last year. Can you share your business school experience and how that might have played a role in your decision to launch RTR?

JF: I think leveraging Harvard Business School’s professors and the network has been very helpful. Business school is a great opportunity for you to take a pause in your career and think about what you really want to do. I spent a lot of time there talking to lots of people in different fields, learning about different industries. The really great thing is all of the professors there and the expertise that they bring. You can explore so many different areas of business whether it is fundraising advice or issues on the operational front or even reaching out to fashion contacts that exist at Harvard Business School.

JS: How would you best describe RTR and what is the main problem that it addresses?

JF: The biggest problem is that women constantly want to have different things to wear and it doesn’t necessarily make sense to own all of them because a lot of the time they will only wear it once. So, for example, that hot pink mini dress that is going to be posted on Facebook that everyone will see and will never be worn again, can now be rented.  If it’s a basic black dress that you will probably wear twenty times, then you should go ahead and buy it, but there are certain statement items where it makes more sense to rent.

JS: Who is your target customer?

JF: Our target customer is age 18-35. It’s for women who have a high disparity between their income and the amount of social activities that they have in their lives–girls who are a few years out of school and may not be making that much money yet but have tons of social events. They have black tie parties one night, a date another night, and office parties on another night. Many are situated in metropolitan areas. We do find that in every stage of a woman’s life there are different occasions. For example, girls in college are renting for sorority parties and they are looking for different styles from girls renting for black tie weddings and benefits. There is always an occasion in life that makes [RTR] a good opportunity. About 15% of our customers are repeat customers and some of them have rented up to five times.

JS: What’s your favorite party outfit?

JF: I really enjoy getting to know some of our new designers. For example, Brian Reyes is a designer that is actually located right next door to our offices so we get to interact with him and his team a lot and we have a lot of fun dresses from his collection.  There is a really great Temperley London dress that is a hot blue indigo that I’m looking forward to wearing–it’s a perfect beach black tie dress. It’s fancy but still flowy and good for dancing.

JS: You sought out Diane von Furstenberg for advice on your business before officially launching. Did you learn anything interesting from her?

JF: When we first started the company we knew that this idea wouldn’t work unless designers were on board and the first thing we did was that we reached out to and spoke with Diane von Furstenberg . She is someone who we very much respect in the fashion community. We basically cold called her and she took a meeting with us for an hour and half. She loved the concept and more than anything was like, ‘Go get ‘em, go do it.’ She is an entrepreneur herself and very much believes in women reaching for their dreams. She opened her rolodex to us and has helped us make inroads to members of the design community. [Her support] was a reaffirmation to us that this is something that can be helpful to designers and be a product sampling tool.

JS: I’m sure you’ve come across several skeptics, especially when you were first pitching your idea. How do you respond to people who don’t believe in what you are doing?

Jennifer Hyman: [I] Understand that it’s natural for people to be skeptical about a new idea and if people aren’t skeptical of an idea then the idea is probably not new and not that interesting. What has been important is that Jenny and I have a passionate confidence that this is something that helps customers and that this is something that helps retailers and designers. You would think that a Neiman Marcus or a Saks Fifth Avenue, when they heard about RTR, would be very unhappy because we are renting out designer fashions at 10% of the retail price but if you look at it in a completely different way, we are actually sending tens of thousands of new customers to Saks and Neiman’s to buy brands that they wouldn’t have purchased before, and these are customers who would have been shopping at an H&M. So it’s just about opening up everyone’s mind to the possibility of what RTR can be and then just not accepting no as an answer. [It’s important to] understand that no means no for now and maybe in a month things will change and you can go back and explain how the situation is different.  Understand that when someone says no, ask them why because that allows you levering points to change your business model. A lot of designers and a lot of retailers have had some great negative feedback for us that we used to change the business so that we could be more helpful to them going forward.

JS: How has the recession impacted your business?

JH: In a recession there is a culture where women are more cognizant of cost per wear. So when you go to a store you are buying a little bit less and you are buying smarter. You want to buy things you can wear over and over again.  Our business is exactly the opposite. Just because it is a recession doesn’t mean that you want to stop having fun with fashion and stop presenting whatever your mood and personality is on any given night. So if you want to go out and wear a hot sparkly mini skirt or if you want to wear a Hérve Léger bandage dress and show yourself off, this is an opportunity to experiment with new designers and new trends without that guilt of buying a dress you will only wear once. So we definitely think [RTR] fits in perfectly with the recessionista culture.

JS: Are you finding that customers are picking more unique and special outfits on your site?

JH: Yes. Our customers are utilizing RTR as a way to have more fun with fashion. Items that are really colorful and trendy and different from what they would have bought in the past [do well with customers]. For example, they will rent something bright red because they feel like they can get away with it if it is only a rental.

JS: How do you stay ahead of trends and decide which dresses to offer to your customers?

JF: We are going to use more and more of our Style Council which involves engaging our users and asking them which outfits we should buy so that customers will be able to rent it. We also have a fantastic buyer (Derek Guillemette) who used to work in ready-to-wear for Bloomingdale’s. He has a great relationship with designers and he goes to all of the shows and can engage the customer with what’s going on in the fashion community.

JS: What are some of the biggest mistakes you made early on when you first launched the site and what did you learn from them?

JF: One issue was on technology. We always knew we wanted to have an in-house technology team but we also wanted to get the site up very quickly and in order to do so we used an outsourced team based in India. This meant that our site got up in time for the holiday season, which was great in terms of sales (RTR launched on Nov 9, 2009) but at the end of the day, there was a lot of work to clean up on the back end of our site.  Another mistake is that I wish we had ordered more inventory. We never predicted this much demand, which is a good problem to have. We have been having super high utilization rates of all of our dresses and people just can’t always get the dresses that they want on our site. We have now placed orders for 4,000 more dresses (they currently carry approximately 1,200 dresses) which we will have in by June.

JS: How does RTR benefit designers?

JH: We work hand in hand with designers because RTR is a way to introduce customers to designer brands and designers are really keen on providing a great portfolio of looks to RTR because this is a new customer base that has never been able to wear or afford these dresses before. It may be their first experience with Proenza Schouler or Matthew Williamson. Often, the brands themselves are giving their suggestions and advice on their favorite dresses. We are realizing that yes, this business is about delivering an amazing customer experience, but it is also about creating an amazing relationship with designers.  By introducing new women to all the designer brands out there and building that brand loyalty early, the relationship becomes sticky. We know that if you wear a Hérve Léger dress out on New Year’s Eve and you have an amazing night, you will remember that night and that dress forever and you will want to go out and buy that dress. It’s different than trying something on in a dressing room because when you go out it in it and you get complimented on it by your boyfriend, your friends, your husband, that’s what really creates a special memory and special experience for you.

JS: Are there any designers on your wish list that you are hoping to add to your offerings?

JF: Yes, definitely. We are hoping to add Marc Jacobs, Donna Karen, Michael Kors, Zac Posen, and we’ve been in talks with them for a while. Some designers need an extra level of comfort and [want to] see the site up for a few months to see what the look and feel is and what the customer base is like, but we do have 46 designers signed on right now. It currently ranges from Diane von Furstenberg and Catherine Malandrino to Bibhu Mohapatra and Temperley London, so there is a great representation of the contemporary space and also in the ready-to-wear space. One unique thing about RTR is that there really isn’t another rental company out there that works directly with designers. So for everything we offer on our site, we have gone to the designer and purchased it from them and we are never going to rent something on our site that we haven’t gotten approval from designers to do so.

JS: Do you think that you will eventually expand into other categories?

JF: Yes, we are launching accessories (necklaces, bracelets, and earrings) in April and one thing we have done is we have engaged our user base to help us pick which accessories that we are purchasing for them to rent. We sent out a survey to some of our top customers (approximately 20,000-30,000 women) asking them which of these items would they most want to rent. Based on the feedback, those were the items we purchased. We are really trying to engage our customer base and give them what they want. Every feature on our site is really a function of that, whether it’s the addition of a search by date function, adding more long gowns because girls were asking for them, or just adding more inventory because people were noticing stock-outs. Down the road we are likely to expand into clutches, belts, and scarves, but it will always be very focused around a magical evening out –a Cinderella experience.

JS: Your business obviously would not exist without the Internet. Can you share your views on how it has played a role in fashion businesses like yours?

JH: What is so surprising is that only 12% of fashion related purchases are made online. With the runaway success of websites like Gilt Groupe and Ruelala, you would think that online shopping was more of a big player than it is.  We have a lot of room to grow and there are a lot of interesting things that all online retailers can be doing to make the customer experience more differentiated and more special than the one that is in a store. You’ll never have the same experience that you do in a store of taking six dresses into the dressing room, trying them on, and figuring out which one you like the most, so that is something we are trying to replicate with RTR. We always send the second size for free and give you the option of a back-up style (a second style is just $25). So we are thinking about how we can bring that tangible real world retail experience online.

JF: We also know that many women like to shop with their friends and we are starting to enable women to recommend a dress to a friend or ask a friend through our website [what they think of a dress] so we are really trying to consider factors that in general, make shopping more like the physical experience.

JS: What are your biggest near term challenges for the company?

JF: We have some more European designers we want to sign on and there are definitely more challenges regarding scale going forward as well. And finally, just keeping up with the demand.

JS: Where do you see the business 1-2 years from now?

JH: We are expanding as a first step into accessories so you can rent a complete look from RTR and have the full experience. One of the next markets we are going into is bridal. We think the bridesmaid business is a huge market where women clearly buy a dress where they will wear a dress once and never wear it again. Maternity is another market we will be going into as women go up a size or two for the first few months that they are pregnant, and they don’t want to buy a whole new wardrobe for a size they will never be again.

JS: What is the best piece of career advice that you’ve ever received or given?

JF: For me, it is stressing the importance of building a team of people who similarly believe in the company and love it as much as we do and enjoy coming to work every day. Also, I always worked at large companies before but something I had never really taken to stock was how great it is to work at a small company.  I have touched so many areas of a business; I think it’s something that not enough people weigh into consideration when they think about choosing a job.

JH: RTR is the most fun, rewarding thing I’ve ever done in my life. And it is the only time that I’ve ever felt like my job is not actually a job. It is a passion that I have. This is something that I am just as happy doing on a weekend or doing at the same time as I’m watching Gray’s Anatomy. I don’t feel that this is a burden. I’m making 20% of what I made before business school and I feel 100 times better about what I do on a daily basis. So my piece of advice is to go after what you love because the rewards have been so much bigger for me than being able to buy that extra dress that I was able to buy before. And, of course, now with RTR I don’t have to worry about that. The other piece of advice that Jenny and I have lived by with RTR is never turn down a meeting. You never know how someone might help you. You never know what amazing advice you might get from the most unassuming road.  We’ve received fashion advice from operations people and operations advice from sales people. We live in the best city in the world and people have so many amazing experiences and tidbits to share and if you are open and humble enough to listen to them, and realize that you don’t know everything about everything, these people can be extremely helpful in the growth of your business. I think it has been critical for us in building this business.

Visit RenttheRunway.com to learn more and to start renting away.

–Jennifer Sung