Supported by Greenhaven Road Capital, finding value off the beaten path.
Jenn Hyman is the co-founder and CEO of Rent the Runway. She spoke with Guy Raz on How I Built This about her journey creating the company.
Hyman pollinated the flower that became Rent the Runway while she worked at Starwood hotels. “I had this thesis that we had entered the experience economy.” Later she was home for Thanksgiving, in her sister Becky’s apartment and:
“Becky had just gone to a store and bought a dress that was a higher cost than her rent and as her responsible older sister I remarked that she should probably wear one of the dresses in her closet again rather than go into credit card debt.”
Hyman answered the question, What jobs are your customers hiring you to do? Women ‘hired’ dresses to do something. Hyman explained, “I was having a conversation with my sister about the experience of wearing an amazing dress. Of walking into a party feeling self-confident, feeling beautiful.” Feeling great is the job of a dress.
Now we’ve got a company.
Well, now we have an idea. Companies are much harder.
Hyman was at Harvard and met her co-founder, Jennifer Fleiss. Thanks to a lucky break emailing Diane von Furstenberg (nothing ventured nothing gained) they went to prove their idea.
Future founders should study this. Hyman explained:
“We did real life research. We went to Bloomingdales and bought one hundred dresses – all in our own sizes. So if this experiment didn’t work out we’d have an awesome new wardrobe. We spent a lot of our savings on this. We hosted a pop up at Harvard undergrad. We invited a bunch of different groups. The idea behind this was to see: Will women rent dresses? What will they rent? How much will they pay? What brands do they want? And most importantly, if they do rent, what happens to these dresses after they get rented?”
They talked to Jim Gold at Nieman Marcus who said:
“This is a really good idea women have been renting the runway from my stores for decades. It’s called buying something, keeping the tags on, and then returning it to the store.”
Hyman and Fleiss answered two questions:
- Will young professionals do this? Yes
- Are people already doing something like this? Yes.
Talking to customers is crucial. Great companies have the shut up and take my money moment. Dead companies have no idea what their customers want. Scott Fearon traded on this. Kip McDaniels knows and writes for them. Jason Calacanis said that Airbnb was for serial killers – unless, there were a few crazy first customers. And there were. Andy Rachleff pivoted Wealthfront’s direction after talking to customers.
Before Tony Hsieh invested in Zappos, he didn’t believe shoes would sell. Who would buy something they wear without trying it on? Hsieh wondered. Well, it turned out that catalog shoe sales were the fastest growing part of the market. People were already doing it.
Okay, Hyman and Fleiss have their idea and they talked to customers. It’s time to launch this thing. Now all they needed was 1.75 million dollars of venture investing to build out the inventory. “We needed some selection. You weren’t going to come and start renting if there were only five units of inventory on the site.”
Got the inventory, then what? Pictures.
Pictures? “We figured out right before the website is set to launch we have no photos.” Hyman assumed there was a centralized photo database of all the pictures. Nope. Hyman was naive, and all founders are. Jessie Itzler said if you have to believe you can do something without knowing why you can’t.
The site launched. The women hustle. They built up an email list. Someone on the list had a @NYTimes address. They sent an email. It’s a technology reporter. Noting the fact that women are never covered in the technology section, Hyman and Fleiss get featured in the business section. Their traffic booms. Annual revenue goals are met in a month.
This is great. Right?
As some challenges pass new ones emerge. They need more money. Venture capitalists don’t understand the model. This wasn’t for their wife or admin or daughter. This service was for people they didn’t even think about. This is the Uber story. This is the Airbnb story. This is the Pinterest story. This is the story Hyman is trying to tell. If you shade your view – accidentally or not – you miss seeing things.
Who is going to share a dress, share their car, share their home? A lot of people thought Hyman, and she was right.