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Next is Grasshopper. Did you now that in addition to being the virtual phone system that entrepreneurs love, grasshopper.com has one of the most popular blogs on entrepreneurship? Even if you’re not ready to get a new phone number from grasshopper.com, even if you’re not ready to add extensions to your phone, even if you’re not ready to get text-based voice mail and a toll-free number, and everything else that Grasshopper offers you, check out grasshopper.com’s blog to learn about entrepreneurship.
Finally, who’s the lawyer that tech entrepreneurs trust? Scott Edward Walker, of Walker Corporate Law. But you don’t have to take my word for it. Scroll down to the bottom of the site, and see what other entrepreneurs have said about him, including Jason Calicanis of Mahalo, who says, “He’s a great lawyer, who loves start-ups.” Walkercorporatelaw.com.
Here’s the program.
Everyone, my name is Andrew Warner. I am the founder of mixergy.com, home of the ambitious upstart, and the place where I interview entrepreneurs about how they came up with their ideas and built their businesses.
How do you launch a business that creates a new industry, and get hundreds of thousands of members to sign up? Joining me are Jennifer Hyman and Jennifer Fleiss, co-founders of Rent the Runway, a site that lets its members rent dresses and accessories at a fraction of the price of purchasing them. Jenn and Jenny, welcome to Mixergy.
Jenny: Thanks Andrew!
Andrew: Since we’re doing this by phone, thank you also for using a flip camera to record your portion of the conversation. What we’ll do for the audience is piece together your video with my video and make it look like the conversation we’re having here.
J & J: Great.
Andrew: The first question I have for you here is: I said in the intro that hundreds of thousands of people have become members of Rent the Runway. Specifically, how many people do you have as members today?
J & J: We have just about 800,000 members.
Andrew: Wow. And this is over how long?
J & J: Well, we launched November 9, 2009, so it’s been 15.5 wonderful months.
Andrew: Wow. OK. And what does it mean to be a member?
J & J: To be a member, you’ve signed on to Rent the Runway, you’ve given us your name, your birth date, your zip code. Most of them have browsed and they receive our regular email.
Andrew: I see.
J & J: There’s no charge.
Andrew: No charge, right. A lot of people call you the Netflix for fashion, but unlike Netflix, there’s no monthly fee, right?
J & J: There’s no monthly fee, and also, one of the major differences to Netflix, is that we are introducing a new customer behavior. Women, in the past, have never rented dresses. We all were used to renting movies. We’re not only changing the distribution channel, of renting something online, but renting in general is a new behavior that we’re trying to encourage women to try.
Andrew: I want to spend the interview figuring out how you got to those 800,000 members, and how you explain the concept to people, and then convince them to come and join. But, I’ve got to tell you, in preparation for this interview, I saw that you have a phone number on your website, so I called up to see if I could speak to a human being about the business. Sure enough, I think within two rings I got to talk to someone, and they explained the model to me and the prices, and, in fact… First of all, how many people do you have answering phone calls?
J & J: It ranges, depending on the season, we have anywhere from 10 to as many as 20 people who are answering phone calls.
Andrew: And how many people are like me who… I’m sorry?
J & J: And those are people that are not just doing customer service for us. We actually call those women our Customer Insights Team, because they’re talking to customers like you, they might be explaining what Rent the Runway is, they might be answering a question on how something fits, or how to accessorize something. More importantly, they’re gleaning really important things for us on how we should innovate our business model.
Andrew: Ah! That’s fascinating. What have you learned from them and their interactions with your users, with your customers?
J & J: We have learned a lot, and it’s really guided the evolution of our company. One thing early on was customers kept asking us, ‘What necklace can I wear with this dress that I’m renting?’, or ‘Which earrings would go well?” We found that we were having such an interest from our customers over accessories, we wound up launching the accessories far earlier than we had ever expected onto our site.
We now rent necklaces, earrings, bracelets, rings. We added clutches, because we started seeing a need for handbags on our site as well. Another thing that we learned from customers was around our gowns. We were [capturing from customers], ‘When are you going to have more long dresses?’ We didn’t really know how to make that work operationally, because every woman is a different height. One of our customers said, ‘Why don’t you just pre-alter the gown in different lengths, and that way you can vary, because you [run into] short, regular, or long gown, and it will fit you.’ That’s actually what we wound up implementing and doing.
Andrew: The other thing that the lady who I spoke with told me is that you don’t get one dress. Is it one dress, plus one back up for $25 for that back up size?
J & J: What we do is, we always enable a woman to rent the dress in two sizes. It’s often that a woman will vary between, let say an 8 and a 10, or a 10 and a 12, and she’ll say, ‘I want both the 8 and the 10’, and then she wants another choice. She can pick an entirely different dress and get that in two sizes as well.
It’s meant to really replicated that department store dressing room experience, where you might bring several styles into your dressing room, try then on, see what flatters you the most, and then go out for the night. It’s to give you that extra little insurance policy that you’re going to have a Cinderella night with Rent the Runway.
So, the second size is free, and the next style is $25. You can actually end up getting four dresses for a very low price.
Andrew: Oh, I see. OK. And the rental prices are 10% of the retail price if you’re going to rent it for four days, 30% if you’re going to rent it for eight days. Do I have that right?
J & J: Right. It’s about 10%, and about 20% for eight days, about twice the price or a little less.
Andrew: I met the two of you through Tom Eisenmann, is he a professor at Harvard?
J & J: Yes.
Andrew: You attended Harvard, and that’s where the two of you met. Why did you go to business school?
Jenny: Jenn and I might both tell you different things. I went to business school because I was looking to change industries, and I also knew that I wanted to do something entrepreneurial at some point in life. For me, business school was a great way to meet people from many different industries, learn about different industries, and to spend some time thinking about different entrepreneurial ventures.
Very luckily, Rent the Runway came into my life and Jenn as well, we were section mates. This idea took off right out of business school.
Jenn: I think I went to business school, I had worked for over five years before business school, and had several experiences that I really loved. I still was unclear about what I wanted to do with the rest of my life. I thought it would be a great time to just reset and think about what made me happy, what I was passionate about.
I’d just come out of a company that I wasn’t too excited when I woke up in the morning and got ready for work, and I think that we spend so much of our lives working that I wanted to figure out, ‘What am I going to do where I wake up in the morning and I’m excited about the people I get to spend my time with and just the energy that I’m putting into whatever I’m doing.’ It was really about finding the right culture.
Andrew: What are some of the ideas that you were thinking about when you were in school? Before you settled on Rent the Runway as being the vehicle?
J & J: Well, many of them are top secret, because we will still be launching them at some point in the future.
J & J: Some of them are extensions of Rent the Runway. I think that Rent the Runway is not about renting dresses. It’s not about a retail disruption. It’s about enabling women to feel self-confident and beautiful around all of the most important occasions in their life.
That extends beyond fashion to things like beauty. It might extend to the services that women need for those events. I’m personally really passionate about making women feel fantastic about themselves. A lot of my ideas at the business school were inspired out of that customer experience.
Andrew: How did you know that the two of you were right to go into business together?
Jenny: Jenn and I were friends first. We were in the same section, which meant we had all of our first year classes together. It was a great way to hear one another’s responses, whether it’s to case related questions that we had on a day-to-day basis, to see where we each add value.
On a personal, friendship level, we knew how our personalities work together, and could see how that would be a good, complementary fit, within a company environment. We’ve been really pleased to see how it’s working.
Jenn is fantastic, creative, visionary, and able to rally people both in the company and outside the company around creative and strategic vision for what we’re doing. I’ve taken a roll in executing on a lot of the ideas, so it works really well hand-in-hand together. It was fantastic to have the ability to get to know one another before jumping into the business, which I think is really important for a partner team.
Andrew: Do you have an example of a time, or a situation, that made you say, ‘Yeah, Jenn or Jenny, she’s the person who I need to work with.’
Jenn: I think that you want someone who is both as passionate and as excited as you are, so Jenny and I often would have lunches at HBS [sp] where we would sit around for hours talking about our ideas, whether they were just the idea of the moment, or the Rent the Runway idea. What I loved was Jenny got as animated and as exuberant and as excited as I was.
She also had a bias towards action, so we would have this conversation, and then within an hour or two of leaving, I would have received emails from Jenny with her thoughts, or things that we should do next to figure something out.
When you’re starting a company, it’s one thing to chat and strategize, it’s another entirely different thing to execute. I knew from the second that we were talking about trivial ideas, and Jenny was already, like, ‘OK. How can we test this? How can we do this?’ that that was just a fantastic partner for me.
Jenny: I think for me, Jenn is one of the most optimistic people that I’ve been around, which, first of all, is something that I think you want in your life, in general. So that is great.
Andrew: Do you have an example of that optimism? Was there a time when maybe she shouldn’t have been, or most people wouldn’t have been optimistic, that she’s jumped in and said, ‘Yeah, we can make this happen?’
Jenny: Yeah, I mean, early designer conversations. Rent the Runway is a very hard concept to follow for designers, or at least it was initially. We’re renting dresses, the same dresses that are on retail floors, for about 10% of the price. So, early designer conversations that we had, would sometimes be very rough. Whether it was designers initially telling us they weren’t sure about the concept, Jenn always had an upbeat reaction to it, and a way to solve the problem, and ideas of how to address [sp] it.
Some of our professors at HBS thought, ‘This is a really complex thing to do. Do you want to do this or would you want to explore one of the hundred other ideas you’ve had that might be easier to execute on?’
Andrew: Why did they think that this would be hard?
Jenny: Because, from an operation perspective, there’s so many parts of the process. We have the most operationally intense business. Think of it compared to Netflix. We have to get the dress at the exact day to a customer, in the exact size, the exact color and perfect quality. There’s no wiggle room around timing, around precision, and that’s something that not a lot of other companies see.
J & J: And there’s also risks around, ‘Were we going to be able to obtain these supplier relationships? Would we be able to influence customer behavior? Who would our customer even be? Would we have enough money to market this idea? I mean, we’re starting from scratch on every single front.
I think that a more risk-averse person would look at this and say, ‘You don’t really have anything going for you, these are all massive risks, and why don’t you try another idea?’ I think both of us were so passionate about the fact that this was something that was not only beneficial for customers, but this was beneficial for the fashion and design industry.
Andrew: I understand that it makes sense for the fashion industry. I understand that it makes sense for the customer for sure. But, all those issues that the professors came up with about why you shouldn’t make this into a business makes sense. From a business point of view, how did you counter those business arguments?
J & J: I think, for us, a really important element was knowing that the customer passion was there. We ran some tests at Harvard Undergrad where we actually …
Andrew: Ah! Tell me about those. I’d love to hear about how you ran a test before you launched. What did you do?
J & J: Sure. So we purchased dresses. [laughs] We purchased dresses at retail locations, and we brought them to Harvard Undergrad and let women try them on in our first test, and gave them the opportunity to rent. We were testing; Which dresses would they rent? What price point? What colors? What sort of cuts? What designers? We wanted to see what a woman’s reaction would be to just renting dresses in general.
J & J: And that’s where we really figured out that Rent the Runway is an emotional experience. Women would put on a sequined, Tory Burch celebrity dress and twirl around, and they felt like they were ready for a fantastic evening. You knew that their expression changed, their emotion changed, their confidence changed, and we realized THAT’s the business that we’re in.
Andrew: How do you communicate that online? It seems that a lot of the feedback that you were getting was that in person, trying on the dress, moved people, moved the women and made them feel better. How did you then prove it as an online operation?
J & J: Well, we iterated the test. In our second test, we didn’t allow women to try the dresses on. In our third test, we actually just sent out a .pdf file instead of actually having a trunk show. In general, and we realized that it was not about trying something on in advance.
For years, women have been able to walk into any department store or any boutique and try on any dress. There’s is something that’s magical that happens when a woman wears a new brand to an important occasion in her life. So I wear a fantastic dress out with my boyfriend, and I fall in love that night. I remember that brand. I create a memory in that, and that’s very different than trying something on under fluorescent lighting in a dressing room. That’s still a viable sales channel. Just another viable sales channel is the experience of a brand.
Andrew: So you sent out .pdf files to whom?
J & J: We sent out .pdf files to a 1000 to maybe we did 2000, friends, family of anyone we knew, initially.
Andrew: So you just said, ‘These are the dresses we have for rent. If you want them, email us and we’ll hook you up?
J & J: Yeah, email us or call us, and we’ll get it to you on the date that you need it.
Andrew: I love that. Do you have an example of one piece of feedback, or one person’s response to that?
J & J: We got a lot of people who actually wanted to rent, and I think we saw everything from someone like, ‘Oh, I actually have a wedding this weekend. Thank goodness! I wasn’t going to have time to go out and buy something.’ to someone saying, ‘Wow! Is there really a Calvin Klein dress or a really fantastic dress on there? I’ve dreamed of wearing that designer, and now I actually have the chance to wear it.’
Andrew: I see.
J & J: Actually, some of those people that rented during that trial phase are some of Rent the Runway’s top customers today. So, it was great from a customer loyalty standpoint as well.
Andrew: Did you actually have the dresses, or were you just sending out a .pdf to gauge reaction.
J & J: We actually physically bought dresses. Jenny and I went to Bloomingdale’s and we spent lots of money and we bought hundreds of dresses, many of which were in our size, because we thought, ‘Worse case scenario, we’ll just have new, fantastic wardrobes.’ But, we rented out those dresses initially.
Andrew: Right. Let me ask you this; Well, first of all, where did the idea come from originally?
Jenn: This is Jenn, but you know that, because I’m on video. Sorry!
Andrew: Ah, they do, but I’m still talking to you by phone, so it actually helps to know who’s talking.
Jenn: Sorry about that.
The idea came from an experience that I had with my sister, Becky. We were in her apartment in New York City, and we were figuring out what she wanted to wear to an upcoming wedding. We were staring at her closet, and she felt like she had a closet full of clothes, but nothing to wear. Here’s a girl who spent all of her income on designer fashion, but she still felt like she could never wear a dress more than once. She actually said that all of the dresses in her closet were dead because she had been photographed in them, and they were up on Facebook.
So there was this need that she felt to wear something new, and I thought, ‘What if we could provide a resource for all of the Beckys of the world? They can have fun with fashion, they can try new brands, and they can try them before the occasions that are most important to them in their lives.
Andrew: What I’m finding is, a lot of entrepreneurs are really good at telling the story of where their idea came from, but the idea never comes from a single incident. How did you go from all these conversations that you had at Harvard Business School to all the ideas that you came up with that finally became Rent the Runway. How did you take all those, and make them into the story that now we remember that I’ve now seen on line so much, and that my audience will remember?
J & J: I think that the process of thinking of how we shop, and how women respond to clothing, is something that I have always thought about. I’ve been a huge shopaholic my whole life, I love brands, I am the Rent the Runway customer. I’m also a designer’s dream customer, because I spend all of my income on fashion and will continue to do so, even with a Rent the Runway type of resource, because this is actually a resource for a woman who just wants something new all the time.
So that’s number one, where this is never just a crystallized incident. It could be a lifelong of just gathering information and understanding pop culture.
Now there’s something that’s happened recently that I thought spurred an interesting time for rent the runway. The first thing is that pop culture has changed, and now reality TV is everywhere, and you see more and more women of all ages, from all over the country, that are wearing brands, and people know what those brands are. So people know what a Christian Louboutin shoe is, or what Manolos are, or what a Herve Leger dress is. The fact is that designer brands are seeping more into the mainstream now amongst younger and younger girls. A 13-year-old who watches Gossip Girl knows more about fashion today, than I ever knew when I was 13.
Andrew: So, it was a lot of that understanding of the market, and the world around you, and Jenn’s experience with Becky. How did you pick the Becky story as the one that you would use to explain the need and the origin of the business?
Jenn: Well that’s where the idea truly crystallized to me, because Becky and I were speaking about, ‘Well, what if we could rent a dress?’, or what if we had this dream scenario, where she was able to wear that Marchesa dress or Proenza Schouler dress that she was dreaming about. I think her dream was my idea. It was like, we could actually make this happen. This is not as far-flung as we think.
Jenny: Beyond Jenn and I recognizing in our selves some similar interests to what Becky had, we wanted to make sure that there were millions more Beckys out there in the world. Really, the tests we did and talking to customers were sussing [sp] out, do they feel the same way about this closet full of clothes but nothing to wear?
One interesting market shift that we saw, was that Facebook killed outfits. We heard women telling us, ‘I wear something to a wedding on Friday night, and I have another event on Saturday. I can’t wear that same dress, even though it’s with a different group of people. My photo has already been posted all over Facebook. It’s kind of old news. Especially for the more editorial, kind of colorful styles that are really memorable. Women weren’t feeling like they could purchase those because they thought, ‘Oh, I can only wear that once.’ It was a feeling that they were being inhibited and deprived, where they had to rationalize every purchase. That isn’t fun, you want to shop for things you love. That’s what we started picking up on, and making sure that Rent the Runway was the way to have fun with fashion.
Andrew: OK. You’ve told us a little bit about the early tests. What was the next step after the trunk show and the .pdf’s that you were emailing around. What was the next step?
J & J: In the same time, we were going around and selling designers on the concept and building supplier relationships, we were also starting to fund raise. We knew that it was going to be very important to get funding to launch Rent the Runway, because we were going to need enough inventory for this to seem like a viable solution for a woman. We needed to not only have hundreds of styles, but we needed those hundreds of styles in every size, and depth of that inventory. It’s a disappointing experience if you only have one unit in every single style.
Andrew: Why did you decide to go to designers directly at first?
J & J: We knew that if we didn’t have wholesale relationships with designers, and if designers were not benefiting from this customer acquisition channel that we’re building with Rent the Runway, that the business was not going to succeed. This is a business that helps introduce the next generation of women to designer brands, and you can’t do that unless you have the sign off of those brands.
J & J: We also wanted to make sure that we always had access to the best inventory possible. Current season, things that we love, the ability to recut things if they were a fantastic hit with our customer base. We knew how important the designer relationships were to that.
Andrew: What was the initial feedback that you were getting from them?
Jenn: I think designers met the idea with a healthy dose of skepticism. There was some fear that this might cannibalize retail sales or dilute brand. Jenny and I were very careful to build an extremely aspirational brand that feels high end, that’s targeted to a younger customer who hasn’t yet had the opportunity to purchase the brand. We listened to the feedback of designers, and we molded the business model to actually address their concerns.
Andrew: Can you give me specific examples of a piece of feedback that you received, and how it shaped your business?
J & J: One piece of feedback is, ‘This might hurt my retail sales.’
Andrew: OK. And that’s a fair point because they’re saying, ‘Yeah, women are buying these dresses to use once or twice, and that’s part of our revenue model, and here you are going to take that away and we won’t have those customers.’ What’s your response to that? How did you deal with that?
J & J: My response was that the type of business we were building was one around fun and exploration and experimentation, and if I own a lot of Kitty [sp] dresses in my closet, that wouldn’t necessarily come to Rent the Runway and rent Kitty [sp], because that wouldn’t be fun for me. That Rent the Runway, the way we were going to position the site, the product, the way we were going to communicate with our members, is all about trying something new. So we’re encouraging that girl who has Kitty [sp] in her closet to try Halstead, or to try Hot Hippy, and now, fast-forward 15 months, and 98% of our members rent a brand they have never owned before. So it is really a pure play customer acquisition channel for these brands.
J & J: Another thing that we heard when we started to get going was how excited that designers were that customers were renting really editorial pieces, the pieces that had walked the runway, the really colorful, showy pieces. Things that aren’t often purchased at the department stores because women know that they can only wear it once, were actually getting out there. People were starting to see these fantastic works of art that the designers put together. We realize that our customers want those exact pieces and started to be able to buy more of those editorial items and really encourage new designers to realize that it’s a different type of inventory that we provide than what you see in the stores.
J & J: Right, the things with the highest sell-through in the stores, the little black dress, the pair of pants, the cardigan, the white T-shirt, those are items that we’re never going to buy for Rent the Runway. We’re trying to buy the things with the lowest sell-through in stores, the long tail of fashion. We want people to try that red sequined minidress that they see in the store, they fall in love with, and they feel like, ‘You know what? I can’t justify buying that, because I know I’ll only wear it once, so I’ll buy that black one instead.’ So they can continue to buy the black one, but they can rent the red one from Rent the Runway.
Andrew: Were you trying to get them to say yes, they would sell to you, if you got the funding.
J & J: No, I think that our relationships in the designer industry had nothing to do with funding. They were wholistic relationships that we were building organically over time, that we continue to build to this day, that is about how do we actually help designers, and how do we help retailers acquire new customers. Our true competitor, where we’re stealing new business away from, is from an H & M, or a Zara, or a Forever 21. A place where a woman goes in with a disposable fashion type mentality. She walks in to H & M, she knows that she wants something super-trendy, that she’s only going to wear once, it’s going to cost her $75 and she has a date that night, so that’s the reason.
J & J: So now she can utilize that opportunity to Rent the Runway and try a new brand.
Andrew: So you did your tests at first. You went to talk to designers. What was the next step in the process?
J & J: We set out [xx] our website and really using a lot of customer feedback and focus groups to make sure we had a design and product that everyone was responding well to.
Andrew: What did the first version of the site have? What kind of features? What was it able to do?
J & J: It was very simply able to rent dresses. I think that we were very keen on women being able to sign in, being able to reserve a dress, and being able to check out. Those are the three main functionalities of our website to this day, and there’s nothing that fancy or revolutionary that we’re building on the front end. On the back end, we’re building very complex, very sophisticated technology, from recommendation engines, to services, to entirely new ways to personalize the site.
J & J: We did initially have a wait list, because we only had so much inventory because we hadn’t known how many people would come to the site on day one, or how many people were excited by it, so we had a wait list just because we wanted to make sure we weren’t over-promising and didn’t have enough inventory to get to our customers.
Andrew: But you bought the dresses yourselves, and you had them on hand, and you shipped them yourselves? You did all that yourselves, right?
J & J: Yeah, and we still do.
Andrew: Where were you shipping them from at the time, when you first launched? Was it from your home? Did you have an office already?
J & J: It was from a dry cleaner actually. We partnered with a dry cleaner, we still work with them today, and we decided to store all of our items inside the dry cleaner because we ultimately knew that’s where we’d have to ship them back to at the end of the cycle anyway.
Andrew: I see. And did you have funding at that time, when you first launched?
J & J: We did have funding. We got funding in May of 2009, and we launched in November of 2009.
Andrew: I see. OK. I know that you have $15 million in funding, total. Is that right?
J & J: 16.75.
Andrew: 16.75. So how much of that did you have when you launched?
J & J: We raised a small seed round, under $2 million, and it was really just to prove concept, that women will rent dresses and fall in love with the Cinderella experiences that they’re having. We ended up proving concept in the first two weeks of the business and we realized that we really have something and lets scale it.
Andrew: What did it mean that you proved it within two weeks? How did you prove it? What was the proof?
J & J: Well we had 100,000 members within two weeks, we had …
Andrew: 100,000 members within two weeks of launching?
J & J: Yes, we had over 90% inventory utilization. We had, already, women ordering two or three times. Their average order values were extremely high. We had …
Andrew: How did people… All right, that brings me to one of the biggest questions I had when I was looking at Rent the Runway; How do you get customers? In the first two weeks, how did you get 100,000 people to sign up?
J & J: One thing that was really fortunate, is that we were featured on the front page of the business section in the New York Times. Obviously that is fantastic publicity and PR. PR has continued to be a huge part of our strategy in acquiring new members, because when people can hear about you from a trusted source, a newspaper they constantly read, a morning show they watch, it tells you more about the process than just the name in itself. It really tells you how it works. For something so new, that’s really useful.
Another thing we found was that women were so excited about the concept, whether they just heard about it or actually tried it, that they were referring friends and really speaking in a very organic way about what Rent the Runway is.
J & J: And Rent the Runway is an inherently social behavior, so those first women who rented dresses, they wore those dresses to weddings and parties, and sorority parties and events where there were lots of other women, and they were noticed by those other women. As women tend to talk about, ‘Oh, what are you wearing?’ or, ‘I love your dress, where did you get it?’, those women were so proud of their experience with rent the runway that they said, ‘I Rented the Runway. Here’s this great site that I just came across.’
Andrew: That’s impressive. That happens after that first couple of weeks. What else beyond the New York Times article helped you get to 100,000 people in less than a month? How did you do that? What else did you do?
J & J: We had incredible press and incredible PR in the first two weeks. We must have been…
Andrew: How did you get that? How did you get so much press for a brand new idea?
Jenn: We had been networking for months with everyone in the fashion industry, in the media industry, anyone who knew anyone in the fashion industry or the media industry. We also built some fantastic partnerships to that point. We had built representatives on college campuses across the country who would help spread the word.
Jenny and I had built a list organically of 40,000 friends and family, just of people that we knew and other people who were working at the company, that we emailed out that first day that we launched, and they, of course, referred their friends. It was a lot of grass-roots effort that we did in the months preceding our launch.
Andrew: Let me dig in to what you just said right there, because that’s a lot that we could learn from. The first is a list of 40,000 friends and family that you put together organically? How do you get to 40,000 people? I’m looking at my Facebook profile, and my LinkedIn profile, and those are exaggerated lists of how many people I know, and even they’re not at 10,000 people. How do you get to 40,000?
J & J: We leveraged every friend we had, and we asked them for a few hundred people. We had every employee or even intern who was working at the company give us all their lists of people. We had our parents scanning lists of people that they knew and telling people about the concept. It was really just through network effect and organically speaking. We even held contests with our friends of like, ‘I’ll throw a margarita party with whoever can give me the most names,’ and things like that.
Andrew: And you made them members automatically?
J & J: Um, no, these were people we just emailed to become members on that first day. We invited them.
Andrew: And they had to come to the site and become members? Is that right?
J & J: Yes.
Andrew: OK. So you emailed 40,000 people, some large percentage of them, I imagine, became members. You also had reps on colleges. Who were those reps? How did you get them? What did they do?
J & J: Those reps are our brand representatives on college campuses. We got them by going to those campuses. Initially, our first crop of runway reps we met in the summer before we launched, so there’s a whole crew of fantastic college women. They come to New York in the summer and they intern in the fashion or the media industry, for PR firms, for designers, for magazines, and we would interview the best of the best of those girls, who went back to their respective campuses and started promoting Rent the Runway months before we even launched.
Andrew: That’s amazing. That’s amazing that you’d have those reps on colleges. What did you have those reps do?
J & J: They are hosting parties where they invite women to have cocktails and to talk about Rent the Runway. They are going and forming teams where they host fashion shows. They have a trunk show. They talk to their sororities about Rent the Runway. They are doing outreach to new freshmen on campus to tell them, ‘Oh you have all these events this year. What do you want to do about it? Here’s Rent the Runway, a great option for you.’
J & J: What was really important to us is that social life is quite different, as you can imagine, at a school like NYU than it might be at UNC, and we want to empower our Runway Rep to create the most authentic experience on their campus that’s going to make sense for the type of social life that exists, for the type of women that exist on that campus. We want those college girls to be mini entrepreneurs.
Andrew: I see. How do they become mini entrepreneurs by being college reps for Rent the Runway?
J & J: By coming up with a creative idea of how their going to spread the word about Rent the Runway on their campus, and being empowered to go do that.
Andrew: I see. All right. I love that. OK. You also mentioned partnerships. What kind of partnerships did you have in place that helped you grow your audience [sp]?
J & J: We were talking with fantastic sites like Refinery 29 and Rachel Zoe and companies that we still have fantastic relationships with today. We built a really fantastic relationship with In Style, with Glamour. We even have a fantastic relationship with NOW! We were featured on Gossip Girl, which is a form of partnership. We found that women see these great dresses in so many different places, now. If you’re reading US Weekly and there’s Kim Kardashian in a great Herve Leger dress, you’re inspired to wear that. There’s a natural transition towards Renting the Runway, where you can actually get the same dress that a celebrity is wearing, and feel like a celebrity for the evening.
Andrew: I see, and then the other thing that I noted down here is that you, yourselves, made contacts with the media. Can you tell me about that?
J & J: I think that starting a business, you have to be scrappy in all respects, and you have to be comfortable constantly selling your idea, selling yourself, and asking for feedback. So many of our initial conversations with people in the media industry and in the fashion industry were a combination of telling them what we were doing, as well as getting their advice on this site that hadn’t even launched yet, with, ‘How can we make this better?’ I think when people are invested in your idea and invested in helping you, and they know that you are actually listening to what they have to say, they’re more apt to build an authentic relationship with you, cover you and continue to be there for all the successes of the company.
Andrew. OK. Let’s see what else… Oh, that’s what I wanted to ask, too. Members. Why members? Why didn’t you just say, ‘This is a website, where anyone can come, click the “Rent” button on a dress that they like, and rent that dress.’ Why did you put the membership piece in place?
J & J: This is really important. When you’re building a new customer behavior, there is a gestation period, that you need to educate a customer on what you actually do. Renting dresses is not an intuitive behavior. No-one has ever done it before. There is a series of marketing communications and site communications that we need to push onto a member to make them feel comfortable trying this for the first time. It was really important to have an email address so that we can build that communication plan over time. If we were doing a business that wasn’t encouraging someone to go out of their comfort zone and try something new, we likely wouldn’t have had a membership strategy.
J & J: It’s also a community of people, and that community aspect is really important to us. Members of our site get feedback from other people who have rented the dress by reading reviews. They often need to know that if they return their dress late that’s someone else’s Cinderella moment that their going to be influencing. That feeling of the business cycle, this is something that you become a part of, is really important to us.
Andrew: I love that idea. I love the idea of membership. I love the idea of creating a community instead of saying, ‘This is a website that anyone can come in and rent whenever they feel like it’, say, ‘This is a community of people.’ Where did the idea come from to create a membership?
J & J: Lots of fantastic sites had created memberships right before we launched. Everyone from Gilt Groupe and OhLaLa, so it seemed to be the flavor of the day, but we thought it was even more important for us to have a membership because of the customer behavior that we were bringing into the market.
Andrew: Did you get any push back from people or have any doubts internally about requiring people to be members before they got to participate in the main action on the site.
J & J: I guess we talked to potential customers and consumers about different scenarios and options and settled on this one. It was a dialogue with our customer base.
Andrew: OK. All right. So we talked about how you got the first 100,000 within a couple of weeks, how did you get the next 100,000?
J & J: Hey, Andrew, I’m just going to tell you that our Flip is on the last leg of it’s battery, so we’re going to need to wrap up here?
Andrew: Gotcha. OK. I see. All right, thanks for recording. Let’s talk about the next 100,000, and then we can end the interview there.
J & J: The second 100,000 people?
Andrew: Or, after you grew the first 100,000, what did you do to continue the growth?
J & J: I think it’s continuing the fantastic brand building. Making Rent the Runway a site that women would want to talk about with their friends, so the referral channel is huge. PR continues to be big. Partnerships is really big for us and these are the levers that we continue to use to this day.
Andrew: One last question; If anyone out there is building a business in a brand new market, introducing a new concept to customers, do you have one piece of advice that you could give them?
J & J: I think we always say, ‘Go for it!’ It’s smart to test something out, but definitely there’s really not much to lose. It’s really exciting to be creating something that does change an industry and give customers something so revolutionary and new, so we just hope more people try it out.
Andrew: All right. Well, Jenn and Jenny, thanks for doing the interview. Everyone, we’re running out of battery on the Flip Cam, so I’m going to say thank you, and check out renttherunway.com
J & J: Thanks! Thank you.