B (3:52)

And it was pre Facebook. So you didn't have one of the early invites at Harvard for Facebook?

A (4:00)

I did actually have an early invite for Facebook because I was a Harvard alum.

B (4:05)

So you still have the EDU email address.

A (4:08)

So I had the Edu, I still have it today. So I was actually at my first job at Starwood Hotels when I got that invite to Facebook. And, yeah, I'm interested to know what number I am in terms of their membership, but I think it's pretty early.

B (4:26)

But what we're talking about here in terms of the technology melding with the entrepreneurialism is we are of this sort of generation where if you are a kid that goes in an entrepreneurial direction, even if it's fashion, even if it's this category or that category, the Internet's going to be involved.

A (4:47)

Yeah, I think that, like, my first entrepreneurial idea actually happened at my first job where I graduated from college in 2002. So the hallmark of my senior year of College was September 11th happening in New York City. And that obviously had a huge impact on a lot of industries. One of the primary industries that it impacted was the travel industry. And travel really was decimated after September 11th. And I always was fascinated by industries going through disruption. So when I was in college, I was like, oh, it would be actually really interesting to go into the travel industry right now because they're going to have to change and innovate a lot because their business is doing badly. And so I went to work for Starwood Hotels. And while I was there, I saw that there had been a recovery of business travelers, but we didn't really have products that catered to leisure travelers. And I came up with the idea for the first honeymoon registry in the world where couples could register for aspects of their honeymoon and friends and family, instead of buying them plates and, you know, pots and pans, could buy them a massage or a hotel night or scuba diving. And that was all, you know, one of the first Internet businesses that Starwood at least had embarked on at the time. And it was my first experience doing something entrepreneurial within a company and understanding that all that entrepreneurship is really is having a big idea, then corralling and kind of getting a whole team of people, whether they report to you or not, to get excited about that idea, cross functionally and help you implement it.

B (6:39)

You're a in house entrepreneur somewhere at one of your early jobs was that Wedding Channel.

A (6:44)

That was at Starwood.

B (6:46)

So that was still Starwood. Okay.

A (6:47)

Yeah. I mean, I didn't start off there as being an in house entrepreneur. I was hired as an analyst and I was rotating through various parts of their business. And about a year into my time there, I saw that there was this opportunity to create this first honeymoon registry. The reason I wanted to do it is I thought that customers were starting to value experiences over ownership and that one of the primary experiences that we could acquire a new customer for a travel company was actually around someone's honeymoon because they could build a memory around going to that hotel and they'd want to go back for anniversaries and for trips and the future and that it would actually be this great leisure acquisition channel for the company. So really spent the next two and a half years at Starwood building out that program and it was kind of my first entree into the Internet. Then what became interesting is we built that business alongside a partner company called WeddingChannel.com and that company was based in LA at the time. And I then went to, for a very short period of time, for a year, went to work for Wedding Channel and I was selling ads online for. In the beginning of the Internet, this was like 2005, so like really dialing for dollars with advertisers to, you know, sell ads both to big companies and to local businesses and trying to bring their ad business online and then move back to New York.

B (8:17)

In these, in these first few years, you're learning sales, you're learning partnerships, you're learning operations. Were you already thinking we'll get to the founding story of Rent the Runway in a second, but were you already thinking that what I want to do with my life is entrepreneurial?

A (8:38)

Absolutely not.

B (8:41)

What did you think you were going to do?

A (8:43)

I just thought I was going to work in business and be in creative type industries. I actually had no idea. I was just having fun along the way. And I honestly only see my experience at Starwood as being entrepreneurial in hindsight. If you had talked to me when I was 23 or 24, like, I never would have described it as being an in house entrepreneur, even though that's exactly what I did.

B (9:10)

Well, you do go back.

A (9:12)

The language around startups and entrepreneurship is completely different today than it was in the early 2000s, especially in New York.

B (9:25)

That's interesting. A lot of people say that to me that, you know, when we were coming up, if you wanted to get rich, maybe, you know, become a rock star or a sports star or go to go to Wall street or something, this idea, you know, entrepreneurs are sort of the rock stars now these days. Do you like, was there no sort of model for that, for like our generation of folks coming up where if want to be ambitious, being an entrepreneur is one of the best ways to do it?

A (9:57)

There was no model for that. If you go back to my college experience, you know, being at Harvard, very competitive place. I would say that the traditionally smartest kids at Harvard got jobs and wanted to get jobs at Goldman and McKinsey. Those were the two routes that you were going to take. Like anyone who was even exploring. There was no one that moved to San Francisco. Like, I actually can count on one hand the amount of kids from my graduating class that in 2002 moved to San Francisco. But even more so, like it was very rare to go and work within a company. The only reason that I applied to Starwood and I also applied to Disney is that Disney and Starwood had these two very, very prestigious or prestigious to like a 21 year old at Harvard that thought that the word. Basically they had these programs called strategic planning. Disney had a strategic planning program and Starwood had a strategic planning program. And somehow like at the time the word strategy was considered sexy, that was what you were striving for. Again, you wanted a job in strategy consulting or you wanted to go to work or Goldman Sachs or Morgan Stanley. So any other job, like if I wasn't good enough to get the job at Morgan Stanley or Goldman or McKinsey, the next best job that you could get was going to do strategic planning at a company. Interestingly, fast forward now to like the 20 plus years later and like strategy is like, if I see that word on anyone's resume, I won't hire them. It's like the worst thing you could be is in strategy because.

B (11:47)

Tell because.

A (11:48)

It means you do nothing. It means you literally do nothing. Everyone has to be strategic in their role, no matter what their functional job is. And like, I certainly cannot afford to pay anyone to sit around all day.

B (12:02)

And think, well, or it would suggest to me that that's a cookie cutter thing, like what you're describing as well. This is the route I fit into this slot and this is my career versus inventing a career for yourself.

A (12:20)

Yeah. There was no notion that you could invent a Career for yourself, I would say. I didn't come from a wealthy background, and so there was always a pressure that I felt like that I needed to immediately get a job, immediately make money, immediately be able to pay for my, you know, rent and food and life. But even the wealthiest kids at Harvard never considered making their own careers and making their own jobs at that time. And so I really think there's been a complete cultural transformation that's really exciting in terms of how people are dreaming big for what they want to do with their lives.

B (13:10)

So to come back to the chronology, you go back to Harvard for business school, right?

A (13:15)

Well, the chronology is I worked at Starwood for about three and a half years. I worked at Wedding Channel for a year. I then moved back to New York and I worked for img, which is a now part of wme. Big agency they owned at the time, like sports agents. They also owned Fashion Week. They owned a big modeling agency. So they were kind of in the fashion business. And Ted Forsman, who was like a big private equity raider of the 80s and 90s, had taken over IMG and was kind of restructuring it. And so it was a kind of an interesting time to be there. But the learning that I had just being at IMG was, culture of company is very important. So. So I had been privileged at that point that at Starwood and at Wedding Channel, the cultures were awesome. And I thought every company was like that. And then I got to IMG and it was. I can't imagine a worse culture. Like, to this day, like it. I have nightmares about what it was like working there. It was so dog eat dog, everyone was out to get one another. And you realize, like, actually this business isn't going to go as far as it could because people actually aren't collaborating. There's no incentive structure to actually work with your colleagues. But while I was there, I also learned how broken the fashion industry was from the standpoint of the designers. That all of these designers that I thought were super famous and making tons of money, actually they were very small business owners. They were making very little money. Often they were not even profitable. And so it was just like the seed of me starting to think about the fashion industry, at least from the B2B side. And then I go to Harvard Business School. I'm there for about a year. I actually, what was interesting was in the summer between my first and second year of business school, I interned at McKinsey New York. Why did I do that? Because it was still considered the most prestigious job. And as like a prestige whore that I was at the time. I thought, oh, I couldn't get this job when I applied in college. Like, I'm going to try to get the most competitive job now that I'm a first year at hbs. I got that most competitive job. I went there, I interned there for the summer and really realized, like, oh, McKinsey or strategy consulting is where smart people go to die. Like, this is the opposite and antithesis of like my soul, my personality. And that is what pushed me to be an entrepreneur. And so I got back to school second year and had this idea for Rent the Runway when I was home for Thanksgiving break with my sister in her apartment in New York. And yeah, I've been working on it ever since.

B (16:16)

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A (18:35)

It was immediate. So I had this idea. My sister had gone out to buy a dress at Bergdorf. She had spent $4,000, put herself into credit card debt. I told her to return the dress. She wouldn't because she said her closet was dead to her. She'd been photographed on everything. All the photos were up on Facebook and she needed to wear something new. So really it was thinking about how social media was going to further expand, accelerate this need that women had for constant variety in their wardrobes. And that there was no affordable way to get that variety unless you bought things super, super cheap. So the only alternative was really fast fashion. And so the thought was, can you actually wear the real aspirational brands but kind of get it for the fast fashion price points via rental model? And so I had this idea on a Saturday night. I went back to HBS on Monday, had lunch with Jenny, shared the idea. She said it sounded fun. We literally sent cold emails that day to Diane von Furstenberg because we thought that we should start to like do research on like whether this was a good idea. And actually we were in the process of co creating the idea, right? Like we just had a seedling of we should rent dresses and we cold emailed the dvf. Someone in her office got back to us. We ended up meeting her the next day at 5pm so it was like three days after having the initial idea. I introduced myself as the co founder of Rent the Runway and pitched her on, hey, like, what if we rented your current season dresses when they were still in retail stores for 10% of the price? Like, what do you think? And she actually hated the idea and said it would cannibalize her sales and ruin her brand and who the hell was I and all of these things. But actually Jenny and I engaged her in a conversation that turned into an hour and a half meeting. And by the end of that meeting she said, you know, everyone thinks that all my customers are in their 20s because that's what I want them to believe. But in reality, all my customers are in their 50s. So if you could build a business that made me relevant to anyone under the age of 50, that might be interesting to me and I might work with you. And that became the seed of like, oh wait, this idea that I have for rent and clothes not only has a customer value proposition it has an industry value proposition and therefore it could actually be a real business. And so Jenny and I started working on this immediately and we probably spent 50% of our second year business school just back in New York. So we were just like pounding the pavement, meeting with everyone we could, both in the fashion industry, but also meeting with just the VC world and, yeah, the whole startup world. And remember at that time. So November 2008 was a really interesting time in both tech and in fashion. So Gilt Group had launched one year beforehand and Alexis and Alexandra, two of the co founders of Guilt Group, had gone to hbs. They were also really good friends of each other's. And Jenny and I looked at that and we were like, oh, wait, like, here are these two smart, young, cool, pretty women who have started this amazing company. It kind of gave us, like, we could do this too vibes. And then at the exact same time, like, obviously we were in a massive recession and traditional retail was doing very poorly. And that November, Saks went on sale for 80% off. And it was like all over the papers that basically, like the brands were going crazy that their department store partners would like, desecrate their brand value that much. And so we thought like, oh, this is the most interesting time to kind of come into this industry and disrupt because people are open to new business models because of how badly the traditional business model is doing.

B (22:45)

People are desperate. But at the same time, in the fundraising environment, in the teeth of the Great Recession, what was that like to go out and try to pitch a business to VCs in the midst of, hey, maybe retail is going to be dead for several years or something.

A (23:05)

We didn't even know enough about the VC world and the fundraising world at that time to realize that we were fundraising in a very difficult environment. We were just like naive. And not only business school students, but we were one of the first co founding teams. Our year 2009, HBS has a few different companies that were founded out of it. We were really the only ones that came to New York. But my friend James Reinhart founded Thredup and he moved to San Francisco. My friends Michelle and Matt founded Cloudflare, which has been very successful. They moved to San Francisco, but, like, this was really the first year where people left school and actually became entrepreneurs immediately, like from school, raised money, et cetera. So we just didn't know anything. We didn't have any background. There were no friends that we had that were entrepreneurs. And actually, funny story, we did go out to have conversations with folks in New York and in Boston as well as on the west coast. And the two companies that were most interested in investing in Rent the Runway were Benchmark and Bain Capital Ventures. And the reason why we ended up going with Bain Capital Ventures was because I had never heard of Benchmark before and neither had Jenny. And we had heard of Bain Capital because all of like the smartest people at HBS had worked for Bain Capital before school. And so that was a traditional company in a traditional industry. We're like, oh my God, that's so prestigious. Little did we know the Benchmark was like the most prestigious place we could have raised money from. And like, you know, it ends up that my Bain Capital partner who we raised from is like almost our third co founder and it's amazing and life works out as it should. But like that's just how naive we were that we were like, oh, like this random place on the west coast Benchmark, we'll go with Bain Capital.

B (25:12)

What's the, what we would call today the minimum viable product? Is it when you're going out to do like try ons on campuses in various places?

A (25:22)

Yeah, I mean we had an iterative MVP strategy where like the first minimum viable product was let customers come to a pop up. In real life there's going to be lots of different dresses there. We're going to price them at different amounts. We let them rent them, we see if they'll pay for them, we see if they return them, can you return them through the mail, how dirty are them, how dirty are the dresses when we get them back, are any of them stolen, etc. We then had a second pop up that was at Yale, so our first one was at Harvard, the second one was at Yale. So similar demo of customer but changed the location. And what we changed the variable we changed was we didn't let you try the dress on. So we showed you all the dresses in real life at the pop up. But we wanted to be more reflective of the Internet where we said, okay, you can't try it on because we knew that fit would be a major concern that people had in rental. And so we wanted to see what was the conversion drop between A and B. The third thing we did is we just literally took photos of all the dresses, created a PDF, emailed that PDF out to friends and family and we understood. We then we're trying to figure out, well, what's the conversion off of the PDF and how does it drop? And that MVP testing helped us figure out what conversion might end up being and what features we needed to launch with that would help secure conversion. So one of the features we launched with because of that MVP testing was you got the second size for free. So when you were renting you can say I need it in a size 8, but send me the size 10 as well so that you can kind of ensure the perfect fit. When did making plans get this complicated? It's time to streamline with WhatsApp, the secure messaging app that brings the whole group together. Use polls to settle dinner plans, send event invites and pin messages so no one forgets mom 60th and never miss a meme or milestone. All protected with end end to end encryption. It's time for WhatsApp message privately with everyone. Learn more@WhatsApp.com this episode is brought to you by State Farm. Listening to this podcast Smart move Being financially savvy Smart move. Another smart move Having State Farm help you create a competitive price when you choose to bundle home and auto bundling. Just another way to save with a personal price point plan like a good neighbor, State Farm is there. Prices are based on rating plans that vary by state. Coverage options are selected by the customer. Availability, amount of discounts and savings and eligibility vary by State.

B (27:55)

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A (28:43)

Think it was really through a process of building relationships over time. So DVF was not sold on meeting one, she was definitely not sold on meeting two. But she liked us enough to have meeting two. She liked us enough after meeting two to have meeting three. And like you kind of just go from there. And in every single meeting we would have, we would always ask the person we were meeting with, like who else should we be meeting with? And we've formed kind of a web of different contacts and relationships with people based on doing that. But, you know, it was a really exciting time to be in New York. So what was happening at the time when we moved? We graduated very early, June 2009, and we immediately moved back to New York City. And we needed folks that would help us design what would be our first website. And we heard about this company called Charming Robot. And the way that we heard about it was that they were sharing office space at the time with Foursquare. And so we knew about Foursquare, and we're like, oh, there's this company called CharmingRoadbot, and they can help us do our UX and figure out how to design this thing out. And so Charming Robot and Dan Macaron, who was one of the partners there, was kind of instrumental in helping us shape the early days of Rent the Runway. And obviously through that, because we were spending a lot of time in their offices. We also met Dennis and Foursquare guys. We became really, really close when we moved to New York with Alexis and Alexandra from Gilt Group, because they were like, you know, the Jen and Jenny two years older that had already started to disrupt the fashion industry. And Alexandra actually was constantly making intros for me with various brands. And she was so kind to be like, hey, you should really meet Jen Hyman and talk about this new model. And so she was opening doors for me with the designer community. Two of the other entrepreneurs we became really close with that helped us at the time were Andy Dunn and Brian Spaley from Bonobos. So they founded their business in New York in 2007 in the Flatiron. And I actually lived about two blocks from their office. So I would go over and, you know, hang out every once in a while or meet Andy afterwards for a drink. And we got a lot of their advice, and they had built a great customer service team. And they had modeled their customer service team, the Ninjas, after Zappos. And that encouraged us to reach out to Tony Hsieh. And then we went out to Zappos to kind of see their whole operation. And we then also, like, invested in our customer experience from the very beginning. And that has become kind of a hallmark of our business. We set up shop in Hudson Square, so we were one of the first startups to move into Hudson Square. The only other startup time that was in Hudson Square was the ladders. And so the ladders was a block away from us, and we moved in. And a year later, Warby Parker got a space about two blocks away from us. And within the 10 years that we were in Hudson Square, it Probably went from, you know, having less than 10 startups in the area to, I think, having at one point more than 10,000 startups that were in just that little area of New York City and all of the various, like, retail and restaurants that popped up because of it. And now, like, that's where Disney is headquartered. Like, it's really crazy to see, like, that whole neighborhood have changed really, because of the small part that we played in it of bringing the startup ecosystem into downtown New York City. But just thinking through all of the people that we were talking to at the beginning, one of the other people that became instrumental and important advisor I'd interviewed for a job while I was at HBS with Diapers.com, which is Marc Lore's company. And we met with him for lunch at a restaurant right around the corner in Hudson Square. I'm forgetting the name of it. I need to ask Jenny. And he just had a very aggressive philosophy on how do you fundraise and how do you hire and how do you set up the right talent. From the beginning in the organization, we were constantly in learning mode from all of these other founders and these other people in the ecosystem. Another person that we met with a lot early days was Bent Lehrer, who was running Thrillist at the time. So he was not yet a VC. And Thrillist was one of the main ways in 2009 you wanted to be written about in either Daily Candy or in Thrillist. So you were meeting with those small media companies that had newsletters that were sending out email newsletters so that they could write about your launch. So he was like someone that we have met with in the ecosystem and talk to a lot. I Remember meeting in 2009, David Tisch and Zara, his now wife. He was throwing a party for her for like a handbag line that she had in the current space that right, right near our offices, where right now it's a Barry's boot camp, but like it used to be a restaurant where he threw this party. And we met him and he was like, I'm starting to invest in companies in New York City, and New York City is going to be this big tech scene. And it just felt like there were all these people that were our age building something. We were all friends. We would all meet up for, you know, drinks and lunches and dinners and share ideas. And, you know, it felt like there was this kind of new generation of consumer companies that were growing in the city at that point.

B (35:41)

Right. There's several historical things coming together, like what would eventually be called dtc. But also like you're saying social media is maturing and newsletters and stuff like that. To what degree? The community you've just described, the people you just spoke about, to what degree are you all learning from each other, sort of like via osmosis? And to what degree does someone have a success and they're like, hey, you should try what we just tried.

A (36:10)

I think that it was both. We would, in conversations with Andy and Brian, talk about marketing tactics they had tried and we would copy it. We would learn about people they had hired that had failed or that were really successful. We were constantly sharing ideas on talent. We were learning, like, who do you even have on your team? Like, how are you structuring your team? It was really helpful to understand what was happening at Gilt Group at the time because of Kevin Ryan at Gilt Group. Gilt Group was much more sophisticated and had a lot more executives that had had had real careers before they had gone to Gilt Group. So you know Kevin, yes, they had Alexis and Alexandra almost as their front people. But Kevin also had brought in all of these other people into guilt group that had been with him in the ecosystem building out companies for the 10 years prior. So it felt like the folks that worked there were 10 years ahead of us in some ways. They were 10 years older. They might have been 15 years older. They had a lot of experience. I remember when he hired Susan Line to be the CEO and she started hosting breakfasts for female founders and CEOs in New York City. And they were breakfast that would have me and Jenny and Katya and Haley from Birchbox, and later on, the founders of the Skim, Carly and Danielle. And you know, every female founder that was in the New York ecosystem would get invited to these breakfasts. And it was just a time for us to get to know each other and really just develop friendships that later on we would do marketing partnerships together and we would do list exchanges. And, you know, some of those people became good friends.

B (38:33)

Final question. A cynical thing would be to say, well, of course Rent the Runway happens in New York, because the fashion industry, right. But what would you say to anyone in any sort of niche that is doing a startup? What would be the advantage to doing a startup in New York City? What is the thing that is unique about New York City as a startup ecosystem?

A (38:59)

That it's not just engineers that we never could have built Rent the Runway in any city beyond New York. You needed to have the competency in fashion and merchandising and be near the industry. But think about, like, you're starting a startup in media. Like, there's no better place to do it than the eco, the center of media. You're starting a fintech company. Oh, you're in the financial capital of the world. Like, you're hiring talent. Yes. Like there's great engineers who ended up coming to New York and that talent at some point became more equivalent to the talent out of the Bay Area. That was always the, the warning that people would have. It's like, oh, you'll never get engineering, the 10x engineering talent if you're in New York. And it's. Maybe you didn't, but maybe you didn't really need it. Not every business had to be like hardcore technical. And I actually think that that was one of the biggest crimes of the 2010s in the startup world, that we all thought we had to build tech businesses and had to have these huge engineering teams and huge data science teams, when in fact I was actually building a fashion company that was supported by technology and was supported by logistics. But at the end of the day, everyone comes to me for the invent.