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- [00:00]
Capital One
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Sarah Lynch
I'm Sarah lynch and you are listening to your Next Move audio edition. Produced by Inc. And Capital One Business. Today's episode comes from the youe Next Move vault and is a conversation between Bea Dixon and Jenny Fleiss. Jenny is a powerhouse entrepreneur who co founded Rent the Runway to solve the problem of how to attend multiple weddings per season without either a limitless budget or reusing the same attire. Endlessly in their conversation they discuss how this idea became a super successful reality and how Jenny learned to trust her people and herself as a leader. Here is Bea's conversation with Jenny Fleiss. Enjoy.
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Beatrice Dixon
I am Beatrice Dixon, Founder and CEO of the Honeypot Company and your host for this live streaming event. It is my pleasure to introduce our speaker today. Jenny Fleiss is one of those powerhouse humans who founded Rent the Runway, the head of Walmart's incubator Jet Black. And to top it off, she's a venture partner at Volition Capital. She is the definition of achievement and ambition. Jenny, I'm so grateful to have you here with us today. How are you doing?
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Jenny Fleiss
I'm thrilled to be here. I'm doing great. How about you?
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Beatrice Dixon
I'm doing wonderful. I'm happy. I'm well. I'm here talking to you.
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Jenny Fleiss
I know we're all grateful in a new way post Covid, but this is good to be getting together.
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Beatrice Dixon
Absolutely. So we're going to kind of go through the journey. Jenny Fleiss so we're going to, we're going to start at Rent the Runway. So I think that it's really important that we spend some time with you telling us the founding story of Rent the Runway because it's really a beautiful story. I've listened to several videos and it's really intriguing.
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Jenny Fleiss
Thank you so much. I love reliving it. You know, I started the business with my co founder Jennifer Hyman and we were in business school at the time and it was this amazing place to meet a co founder because we had taken most all of our classes together and we already were able to therefore see how each of us thought about different business problems and questions and realized that there was a really good melding there. And so we were having a fun lunch conversation one day after Thanksgiving break and she said to me, you know, I just went home over Thanksgiving and my sister Becky had purchased a $2,000 Marquesa dress, a very, you know, fancy designer. And she's like, how crazy is this? You know, Becky is barely making enough money to feed herself. She's in credit card debt. She's just graduated college. And you know what she told me? She told me that the reason she bought it was two things. First, that all the dresses in her closet were dead to her because she'd been photographed on social media and they'd been posted and she couldn't possibly wear them again. The next thing she said was, you know, I'm planning to wear this dress to a wedding that I'm going to. I might meet my future husband at that wedding. So you're in your early 20s, you're in the wedding circuit, you're seeing similar people again. And it's these high stakes, frequent occasions. So we were initially kind of laughing over this, this story in this discussion. And then we started thinking about, well, what had happened in the marketplace, in the ecosystem to address these pain points that Becky felt and that we also, as women in our 20s at the time, related to. And one thing, for example, was fast fashion. Zara H&M forever 21, this acknowledgment that, hey, it doesn't make sense to purchase a really fancy $2,000 dress, but it does make sense to look and feel great, to change over your wardrobe. And so the industry was slowly starting to evolve in different ways, but not in ways that benefited designers. And so we thought, you know, what was a way that we could actually benefit designers, work with designers, and also serve this consumer pain point and need. And so from that initial lunch conversation, like at that lunch meeting, we emailed Diane von Furstenberg. We had what we, like, hoped and thought was her email from a friend I texted who used to be on a not for profit board with her. And we got a response back that day. It was within a couple of hours and it's been hot pink bubble letters. It said, come to my office tomorrow at 5:00pm wow. Like, is this really her?
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Beatrice Dixon
You didn't expect that?
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Jenny Fleiss
No, it was her. We're like, is this. Is this real? Is this her? But we're like, I guess, like, this would be fun. And I'm like, a fun story if nothing else. And so we, the next day we jumped to my co founder's car and we did our hair, wore our Diane von Furstenberg dresses, and sure enough, it was her. And, you know, that was the Start of a lot of highs and lows in entrepreneurship. And yeah, it was an amazing journey that I'm really grateful of.
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Beatrice Dixon
Okay, so I've heard that story a couple of times. Obviously doing some research on you.
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Jenny Fleiss
Right?
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Beatrice Dixon
Wonderful story. I think that it's ridiculously dope that you were literally like, you know what, let me see if I can find Dion Von Foster's first member. I love that. But when you. So can you tell us a little bit about what happened? Cause I think that this is really important for the founders that are watching. Right? Any human that's wanting to start a business or already has one, especially if you're thinking about raising money in the future or taking on something that you've never done before. What happened when you went to that meeting? Because, and you don't have to go into too much detail if you don't want to, but like you guys met with her and it didn't necessarily go at first the way that you thought it was gonna go. And so what happened at that meeting? You know, there's a couple layers of a question, but first I wanna hear that and then I'll ask my second.
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Jenny Fleiss
Part of that question.
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Beatrice Dixon
But what happened in that meeting and how did you feel, you personally feel when you walked out?
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Jenny Fleiss
She hated the concept and that was incredibly demoralizing because we had gotten all eager and excited. We're sitting here in her fancy office. She actually responded to us and you know, maybe we'll be entrepreneurs. Right? We had walked in there, we introduced ourselves as co founders and I left that meeting. She did spend over an hour with us and she poked holes and told us all the reasons why she didn't like our concept business. Right. Which again, demoralizing. It's like not just one, but there was probably like 20 different things and reasons I left that meeting and I was, yes, super demoralized. And it was one of those moments where you really value having a co founder there. Because my co founder was like, are you kidding me? She just told us all the ways that we need to evolve our sales pitch and pivot the business and tweak things. And you know, we have now an inroad to this major person in the fashion industry who took time with us, who seems to like us. And so I think this kind of coin of just like seeing the positives, like making the most of something and then the open mindedness to tweak and pivot and iterate what you're doing is so critical at an early age, as is making sure that like you have that resilient mindset. There's many highs and lows in entrepreneurship and often, you know, a co founder to make the journey more fun, but also to kind of remind you even in those dark moments, like, there's still another way. Yeah.
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Beatrice Dixon
Because they balance things out. Right. Because. And you just answered my second question, my second part of that question, which would have been like, how do you handle the no's? How do you handle when you, you know, when, when. When things didn't go the way that you thought it was going to go when you walked into that meeting.
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Jenny Fleiss
Yeah. And that expression, my co founder and I, after that conversation, started saying to each other, which is, no doesn't mean no. It means not right now. And it is one that we had to use many times in the world of entrepreneurship for many designers who, at the time, when we launched our site, 2009, when we started the business, many of these designers were just selling their products online like it was still a pretty new thing to sell products, let alone rent your products. There were multiple hurdles. We had to build comfort and build relationships with designers, and we didn't come from the designer industry. So we had to get to an average of 10 meetings per designer until we got one of them to say, yes, I will sell you my product. Right. We were just like, here's money. Please take it. We want to buy your dresses. And that was a journey that took time to build the relationships, the credibility and the trust in the business that we were building. And you had to have a lot of resilience. No doesn't mean no. When you're fundraising, when you are trying to hire someone who's your dream hire, like, it comes up again and again.
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Beatrice Dixon
That's what I was just about to say. You literally have to literally date, whether it's. Sometimes it's a co founder, because you may not have a co founder straight away. Sometimes in your instance, it was dating designers. I'm using dating loosely, but, you know, especially when you're wanting to get investment, it's really important to make sure that you're actually spending time, you're catching up. What I used to do. And you could tell me what you used to do, I used to basically put it in my calendar every single month just to follow up, just to say hi to whomever it is that I'm building a relationship with. But that's one of the ways that I do it. I think that that's incredible. What are the ways that you build relationships?
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Jenny Fleiss
Sure. So I think that's a great Way to do it with the calendar reminders and any kind of like self little like hacks in life that we can incorporate that just keep us on our toes. And you know, sometimes I do that very same thing with like goals that I have for myself, right? Of like, hey, if this, you know, thing is still itching me by this day, like I'm going to do something about it. But you know, not right now because like sometimes you need things to settle. Relationship building for me, I think honestly has come somewhat authentically and organically. There's the type of relationships you build like with a designer where you have to or with companies when you're, you know, fundraising and you're trying or when you're trying to as an investor now invest in their companies. And you do need those reminders. You know, we've used whether there's a, a platform called Creatio or Salesforce, there's a lot of tools you can use to have these cadences where you ping yourself and you remember or just your calendar is also fine. But to keep up and keep abreast with this group, I also have some mass email distribution lists where I can give kind of certain updates on performance of my portfolio of investments. Or I've seen a lot of entrepreneurs do it with a broad group of individuals beyond their core investors to give them investor updates and let a broader group be in the know. And, and I think that act of like doing that every month also kind of reminds you to check in with that list of people in some ways. But you have the mission critical, like we must form designer relationships. Like those are probably on some spreadsheet. You're tracking them. There might be like a hundred, a couple hundred. That's like a sales pipeline. And you might use these tools. Then I think you have these opportunistic discussions with advisors, mentors and this list of people where when you need to understand how can I learn about dry cleaning, right, which I ran for Runway for a while, or how do I understand if I'm paying too much for shipping or how to negotiate when FedEx jacks my shipping rates or what do I do to, you know, market in this, you know, in this new moment where TikTok emerge, right? You have roster of types of people who you're going to ping in those moments, you know, and I have those entrepreneurs that come to me all the time. And sometimes it's oh my God, like today I'm really demoralized, like someone quit, what do I do? Or I just like my, my stuff is Stuck. Supply chain issues with COVID it's stuck. Like, what do I do? My customer? It could be any. How much should I pay per square foot? But for my office space, like this roster of, you know, it might be 50 people long. That in your head, you're just going to go to when you. When you need some help. I think it's really critical.
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Beatrice Dixon
Me too. And to really piggyback off of that. I'm still in the rent the rent the Runway part of your life. But to piggyback off of that. Right. Like we're telling humans now what they can do, because you and I both have done these things, right? And we will continue to do these things. It's not like it ever really stops. Just gets a little more sophisticated. But what were the most important investments at the top of when you started it with capital? And what were the most important investments, as you think about it, with your time?
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Jenny Fleiss
It's a really great question. So the most important investment is making sure that you love and believe in the business you're working on, because you're investing your own time. And whatever you do in life, like that will always be the most biggest, the biggest gift, the kind of most scarce commodity and resource that we all need to optimize around. That's a thesis and a mantra that I live by. And so in the early days of building Rent the Runway, that meant making sure that customers liked this business. Not just asking a few friends, not just a survey and a focus group, but getting out there and renting dresses to women, buying dresses at retail, setting up shop at college campuses was the easiest kind of fastest way to just get the product out there. Will people pay for for this? And then will people return it? Will they damage the items? Like, really learning firsthand? And I always look for that in entrepreneurs. That idea that, like, you're going to find a way to test this with consumers. And in doing those tests, you're validating the concept, making sure it has legs and it's worth your time. But you're also seeing, like, do I enjoy doing this? Because you're going to be the one running that trunk show. You're going to be the one picking up the dresses from the customers and hoping that they return it on time, right? So, like, and you're going to be working with your co founder and making sure that you actually enjoy working with that co founder. So. So that's definitely a really key investment, is your time, you know, another set of investments that wound up being critical for Rent the Runway is just the people that you are bringing on board and investing time in finding the right people and that founding team in particular is so important. So making sure that like you have people who are passionate, who believe in and love the business and will kind of like go to bat in all sorts of roles. Like you need a ton of flexibility, you need a ton of all around athletes early on because the business is still iterating and pivoting. And one day you might need someone to help pack boxes in the warehouse and the next day that person might be pitching a fashion designer to try to buy products. A couple other examples we hire. One of our first hires was someone from the fashion industry. So it let us more quickly scale that relationship building curve and the contacts that we had. And that was a really key investment for us. Belding just kind of an analytics platform early on. So we hired a chief analytics officer far earlier than most companies at that time. Now I think it's happening faster, but that lets you learn about your customers. And I think that customer feedback loop is so critical to the journey and likewise investing in customer insights or customer service that you can funnel back the insights, the qualitative insights that customers have as well as that analytics platform for quantitative. And then a really unique aspect of our business is our, our logistics. For Rent the Runway, it's incredibly hard to rent a dress to a person. It's a pre owned unit of inventory and then to get it back out there to another person within often a day. Right. And to turn that item to make sure that it's on time for the next person because it's a special event, often that they have to make sure that it's clean and repaired and like magical condition. And then the final thing I'll call out is we invested in our brand a lot. And I think that's more and more important for consumers these days is just the idea that you, you need to create a brand that resonates with your core customer base, that customers want to talk about. In addition to that aligns with their values, their set of values. So you know, Rent the Runway aligns with female empowerment, female entrepreneurship, sustainability. Like key aspects that we really invested in building a brand around so that women would talk about the business. Because no matter what anyone says, the best way to acquire customers, the most cost effective way is word of mouth. And we knew that when you're at a party, someone compliments your outfit like that's women. That's the entry point of a conversation for a woman. And so we said, well you know what if we can own that moment, if we can have a brand that women want to talk about and share the fact. Thanks. I rented the Runway and, you know, answer questions that the other person's likely to have because it's a new behavior. We're like, that's the key to our business. And so investing in the brand and the look and feel and those aspirational moments and the considerations that we wanted customers to take away was really a critical piece as well.
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Beatrice Dixon
That's incredible. That actually just happened. The last time I was in New York, I was at an event and this lady had on this really beautiful dress. And it had like, a lot of. It had a bunch of. They looked like drawn faces on it. And I asked her, where did she get her dress? And she said, rent the one way. And I was like, aw. Like, my heart smiled a little bit. You know, it was cool.
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Jenny Fleiss
And some of that is about, you know, also really paying attention to macro trends that are around us at the moment. When we started our business.
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Beatrice Dixon
Yes.
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Jenny Fleiss
You know, female empowerment. Yes. Sustainability. A little bit now. Far more. But another thing was like, consumers were proud to be smart shoppers. So we launched a few years after being a couple years after guilt group. And, you know, if we think of this concept where when I grew up, if you bought something at a pre owned, at a thrift store or at Lowmans or just discount, you didn't talk about it. It was like, high. A little embarrassed to be seen coming out of the store. All of a sudden it was like an exclusive black and gold membership site. Gilt group was. That was cool. And you wanted to share that. Like, I'm in. You know, I got off the wait list, I'm a member, and all this stuff like that. So I think grafting on to that fact and saying, you know what? This is a moment in time. And the timing was right for this business idea is also really important.
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Beatrice Dixon
Girl, the timing was right. It's still right. Which. Which is incredible because even in that conversation, it sparked a whole nother conversation with like, every woman that was in the room. It was incredible.
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Jenny Fleiss
Thank you.
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Beatrice Dixon
So, Ginny, what would you say really sparked the trajectory of your business of rent the Runway? What do you think? Just took it to the absolute. When did you know? Like, okay, this is a thing.
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Jenny Fleiss
So there were a couple of moments that were really defining for the business. The first was at one of those trunk shows that I mentioned. So a month into working on the concept where we bought dresses and we set up shop at an undergrad college Campus. The first woman who picked up a gold sequin dress. So the most sparkly sequin dress out there that we had, she put it on and she was transformed. She felt like she could take on the world. She twirled around, she's like, I look hot. Can you imagine look in this guy's face when he sees me? And we're like, that's our business. This is the reason why designer fashion is different and better than fast fashion. And this is why women hundreds of dresses. It makes us feel great. It makes us feel empowered in that moment. Like, you know, put those high heels on and, like, go after it. And we had to rent that feeling, that experience. And we set out to build a brand that was like, experiential commerce. We're saying, like, if this is an experience you're going to have for that evening or when you're wearing this outfit. So that was a lightning in a battle moment. Seeing that customer and saying, like, that is something that customers would pay for. And being the end customer ourselves was critical in recognizing it. Another really exciting moment was we were lucky. Lucky, but also somewhat intentional of being covered in the technology front page of the technology section, the New York Times. And this is in 2009. Very few women were covered in technology. We had this beta launch, and we happened to notice that someone's email in the beta launch, not happened to notice. We were looking. We were so curious. We had, like, customers, people who were interested. And it was New York Times email address. And so we were like, oh, let's reach out to this person and see if she maybe wants to meet and maybe wants to, like, cover us. And lo and behold, it was another, like, ambitious young woman kind of starting out her career like us. And so there's a lot we had to connect on. And she was really excited to be able to have a feature story of women that had this technology angle and spin. And knowing that we then had that hook and that meeting with her, we're like, oh, well, do you want to send a photographer to our warehouse? Our warehouse at the time was our dry cleaner. Like, we literally were in someone else's dry cleaner. I said, you have an extra empty rack. We put our dresses there. So. And then we put on our dresses. We got up on ladders in the dry cleaning. You're like, how could you not include this photo? So that is what I think then got us that front page section. So as much as, yes, there's a piece of luck that, you know, there's also. We had 30,000 email addresses that this beta went out to. Like, that was a lot of work to kind of hand carve the right 30,000 and getting that list of people. So bits of luck, bits of like, hustle and like, get it done. And that moment, you know, I remember going to my door and seeing that the front page, because we knew it was going to be in there. We didn't know where and would the photo be included. And like, then getting into the office and jumping up and down with our team that had worked, you know, so hard to get to that second. And it kind of, you know, it felt like right then, like, wow, we really, we've made it. We're onto something.
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Beatrice Dixon
Wow, that's incredible. The art of faking it until you make it.
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Jenny Fleiss
And that's like, you know, it's the high heel principles, what our brand is about too. Because that's what fashion lets you do. It lets you be who you want to be in a given day. And like, so it was also part of. When we pitched to venture capitalists who were often men, what we had to make them understand that this wasn't just renting a dress or renting an outfit. It was this feeling, this experience, this like you are now empowered to, to go take on the world. Like, this is, you know, your high heel moment in life.
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Beatrice Dixon
Especially because a lot of those humans may not have had the money to go to the store to buy those really beautiful dresses, right? Absolutely. Yeah. I mean, you guys are selling an experience. You're selling. You're selling the first high fashion dress that a human may wear. And that's incredible to me, you know?
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Jenny Fleiss
Yeah. You know, one special thing that we looked at when we did those trunk shows was who were the customers who were getting the most value, who were like the customers we wanted to target and who were the ones where they were a little bit harder to serve. They didn't get the same amount of value. And those who had not previously worn designer fashion were way more flexible as customers and they got so much more value out of like the investment of renting the Runway. So we really tried to double down on that exact thesis and customer group.
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Beatrice Dixon
That's incredible. So I want to kind of pivot a little bit. So at Rent the Runway, you were able to leverage venture capital, right? At Walmart, you were able to really leverage the power of Walmart. In the incubator, you're also. It's crazy. I don't know how, like, how do you do all this? You're also a partner at Volition Capital So now that you're responsible and now that you're kind of taking on so much and you're actually an investor in companies, what are you looking for as an investor when you're talking to these companies or when you're going out and looking for them yourself?
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Jenny Fleiss
Sure. So the first thing is the founders. I usually invest at a pretty early stage, and the founders need to be fantastic or founder in many instances. You need to see that they've not just come up with a business plan or some slides or a lot of talk, but they've got out there and they've done something right. So the example of the trunk shows where we put a couple thousand doll of our own money on the line and like, the. But the grit, the hustle to, like, get out there, set up shop, you know, pick up the dresses, like, get it done, you want to see that they're going to make good use of the dollars and that they're really in this and they know what they're getting themselves into. The second thing is, like, an obsession with the customer. So the reason why we set up those trunk shows and the first thing we did even prior to that was like, let's have focus groups. Let's send surveys. Like, we want to know and understand this customer. And I think that constantly fueled our business because the customer changes. Like, we're in a really rapidly changing world. And you want to know that this person is not only obsessed with the customer and the problem they're solving initially, but that they're going to keep kind of being focused on going back to the well and understanding again and again how to best serve this customer. The next thing I'd say that I look for is obviously, like, it has to be a big market, has to matter. So there's like, basic things like that where you've got to believe that the market's big. Ideally, it's also growing. So there's categories like, you know, micro mobility, electric scooters, electric bikes. Right now, where the category itself is growing so much, yes, the market size is big, but you know that the incremental share is huge. I have some investments in food companies that deliver digitally. Like, food is a huge. Is a massive category. And if you look at the percentage that's gone digitally and online in Asia versus here in the States, it's still so much more room to grow. So, you know, I love seeing that. That ability and that intentionality about it. So, yes, I'd say team, product, market fit, market size, and this kind of, like, customer obsession.
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Beatrice Dixon
I Love that. Yeah. Customer obsession is huge because we exist because of our customers. That's incredible. That's incredible.
- [25:20]
Sarah Lynch
We're going to take a quick break and be back with more from Bea and Jenny.
- [25:29]
Capital One
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- [26:03]
Jenny Fleiss
So.
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Beatrice Dixon
You'Ve worked in the startup environments and you've worked obviously with more corporate types of environments. What strategies are you using to motivate your team? How are you gaining alignment really to work kind of across both environments? Because that's quite a pivot.
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Jenny Fleiss
Yeah. You know, I think it makes you often better if you have that broader perspective out of abilities. And I really saw that come to light at Walmart, honestly because here I was in, you know, a really well known, you brand, a huge, huge company fortune. One business that has been around for a long time and that was born not in the digital age. Right. It was born in. Is the core of that business still. Right. Is the bread and butter of that business. And part of my role and my job or my biggest part of my role in my job there was like how do we move this company into the digital age and not just the today, but how do we get it thinking and set up to succeed for the future and what's to come and creating that kind of ecosystem was really critical. So I think that blend of trying to understand the world of corporate but also know what it is to be a scrappy entrepreneur that helps me on a really regular basis. It's also as an entrepreneur, a bit of what you need to have perspective on when you're talking to potential partners, when you're talking to investors. I think that blend of understanding where someone came from and their framing and some of the older and how do you mesh that with kind of new and what's to come is critical. And another example I'll give of that is just when I start businesses or invest in businesses, sometimes if it's a forward thinking concept, there's a bridge that you need to take, there's the customer on. And so this is true for the customer. This is true when you Work with employees. When you work in a corporation, you need to think of like, how do you build that bridge? Because, for example, with Rent the Runway if day one, we decided that we're going to launch a subscription business and we're going to rent you everything. You can rent leggings, you can rent handbags, you can make scarves, you can rent that. Probably first of all, designers would not have loved that because they would have been a little bit more nervous about it. We might have not been able to operationalize yet. But for consumers, like we started with renting dresses because that was the biggest pain point in their lives. You're spending the most money for a single event and occasion. It was the most photographed moments of the highest impact. It was also very similar to an existing behavior, or borrowing dresses from friends for events or buying something at retail, leaving the tags on and returning it afterwards because you're like, this doesn't make sense. I'm not going to wear the gold sequin dress again. Right. These behaviors that are comfortable to consumers to start is similar to me in this feeling of like, I know the corporation, I know the big landscape and picture. And now I'm going to kind of, with that background knowledge, evolve in the best way. And I did it, you know, a couple of times with the product I started for Walmart. Text based commerce. You know, initially the idea was like, let's work on conversational commerce. The idea that with a voice interaction like Alexa or Google Home, you could actually shop for items similar to the way you have done in physical stores for a long time. And it was, how do we get that sort of experience mobilized really quickly and get smart on that? And I was like, customer research, focus groups, you test and trials. Like, customers actually aren't ready and they don't want that right now. You know why? Because currently it is not actually faster. Like, we aren't yet at a place where the technology is faster for you to shop with your voice. But text message, that is efficient, that is comfortable. It mimics behaviors that you might have with a friend, asking them if they should buy this or like, hey, you know, husband, can you pick this up on the way home in a text? Or an interior designer you might be working with. Right. So I think finding these behaviors that kind of exist as these bridges as you innovate is really important.
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Beatrice Dixon
Yeah. And you know what, we went right into jet black for Walmart. But can you tell us a little bit about jet black? And then I want to come back to what you just said about the SMS Thing because it just makes the most sense. We're all interacting socially all the time. But can you tell us about how you got started with Jet Black and what that is? Because there's some people that don't even know what that is.
- [30:11]
Jenny Fleiss
Yeah, absolutely. Well, the way that I got started there is actually an interesting piece of just thinking of career journeys. When I was at Rent the Runway, I wound up running logistics for three and a half, four years. And I joke that I drew the shortest straw because it's a really complicated. And it was the hardest role to hire for because we didn't want someone who had, you know, worked at Amazon or Toyota, like who was a typical supply chain logistics person because we were doing reverse logistics, turning everything around and we wanted, you know, and that's not a core competency or it wasn't at that time of really any business out there. And when we did try to hire people from some of those bigger companies who had that playbook, it wasn't working. And so I got in there with this kind of fresh perspective, fresh set of eyes. And yet, and this is something I also look for in founders, like humble enough to learn, I'm like, but yet I need to learn from people. And so I cherry picked businesses that I really respected who were innovating in the world of e commerce and digital. And Alfred Lynn at Zappos at the time was, was one of the people I was like, I want to learn from him. And Craig Atkins who he had hired to work on logistics. And then Mark Lorre was another one. And Mark at the time was running Diapers.com, which was a business that was acquired by Amazon shortly thereafter. But him and Nate Faust on his team, they were really pioneering this idea that you could get order your diapers by 10pm, you could get them the next morning. And that was kind of mind blowing concept for customers that really hit on a unique need that a parent had. And so that relationship actually led to my being at Walmart. Mark later in his career started a business that was acquired by Walmart and Mark was placed as the CEO of the US E commerce business for Walmart meant to, you know, catch up honestly to Amazon in that, in that moment, if I rewind, you know, four years ago and to push forward a digital strategy. And he asked me to come in because I kept in touch and knew him from that initial set of questions I had asked probably 10 years prior to think about, well, what's coming next? Like hey, if I'm focusing on playing catch up in the here and now, like what's going to happen 5 years? How can we set ourselves up for success, for what's to come into shape retail in the future? And with that lens, we picked out a few key trends that we felt were going to be really transformational to how people shop in the future. And one of them, which became a really big area of focus was conversational commerce. And so Jet Black was personal shopping over text message. The idea that you could text anything you wanted to order, it did not have to be a Walmart item only and you could get the order placed. We would store your personal information and details in an encrypted, behind the scenes way so that we knew your kids shoe sizes, we knew the type of hand soap that you buy, we knew your laundry detergent, your paper towel skew preference. So all you would have to do would be paper towels. And it was like done. What is fast? What is a faster solution than at that time like Amazon prime and one click delivery, it's like, well, what if it was no click? So it's that sort of thinking of like what services the customer need? Even better. And one piece that was really interesting there and I think again relates to this building bridges is there's a lot of tech that we build to automate some of those interactions. And yet we also it was very necessary to keep a feeling of personal connectivity. So if it was a frustrating bot that was responding to you and clearly like there was no one kind of monitoring or there at all, like that would take away from the trust, it would often take away from the quality of the experience. And especially early on in the cycle of building a company, you need to optimize for the ideal customer experience and then you work backwards making all the economics work. So you need to know on paper that they can work. But you start with like let's service the customer the best way. Let's get a super, you know, zealots who love the business, they're super passionate about what you're doing, they're going to talk about your company and then let's try to, okay, we can automate this, we can evolve this, we can, you know, work on these pieces. But that personal, that touch of the actual person behind the computer combined with the automation was a key unlock for that particular business.
- [34:14]
Beatrice Dixon
Wow, that's incredible. So guru of direct to consumer business everybody, Jenny Fleiss. So now we have an audience question, Jenny from Carla P. What she asks is what would you describe to be the best steps to take or focus on before Keyword before contacting a venture capitalist.
- [34:42]
Jenny Fleiss
It's a great question. So first off, I would say try test the concept with consumers again, kind of this. Show that you've got the hustle, show you're going to make good use of capital. Show that you've done the work. And the work isn't six months on a business plan with like a document. The work is like, we saw that customers beyond me and my close to like a group of customers really needs and wants this. And you've got to. You've got to be kind of ready to paint that framework of the problem you're solving and show. I often say show. Don't tell how you're solving it. So, for example, we used videos where we had these trunk shows and we videotapes of the girl twirling around in the gold dress, that transformational feeling. And especially knowing your audience of male VCs who we needed to get them to understand and get in the head of what it is like for a woman when they put on a great designer dress. We would start the meetings with those videos. Another key thing for us was finding the right way in to the right investor. And so we thought strategically about, you know, VCs. I will tell you, like, we get, you know, probably three or four pings a day with a company to look at. And who. How do you stand out? How do you differentiate yourself so that that's the email they're going to read or respond to? And one great way is to make sure it comes from like a trusted source. I mean, this is a big filter I put on what, you know, which emails I read and which deals I wind up looking at. Did it come from another investor that you trust? Did it come from someone that you've worked with in the past? And even if it's just as doing a favor, it means you're going to give them a look. And so for us, we wound up relying on the top venture lawyer in the Northeast. And we kind of muscled our way in to figure out who it was and then essentially pitched to him first so that he would take us on on a deferred fee basis. And he was the one who sent kind of the initial teasers for making introductions to different investors. And by going through him, you know, he had worked with these people, they knew him. He was a familiar name on the email. He had actually gotten that through an initial filter of seeing us pitch and knowing that we were legit and worthwhile. We were quite confident, you know, people would at least read that Email and that we would get to the right partner at each firm because he knew who was working on a specific category, from deals they'd missed out on or from areas of focus. Who was the most senior person we could get to. Which also really matters when you're approaching VCs. Like, you do want to try to get to a person who has real weight and influence at the fund and.
- [37:02]
Beatrice Dixon
To also piggyback off of that. Don't start off with venture capital necessarily.
- [37:09]
Jenny Fleiss
I'm so glad you brought that up. I think often people assume I'm going to go out and raise a million bucks, or however much it is not the right solution for every business. The key couple of things that led us to pursue venture capital. One is like, we needed a good deal of money. We needed to buy inventory. We needed enough inventory to service again, that customer needs. So, like, start with, like, if you can actually service the product of the problem, you want to feel aspirational. That means you need a lot of different items. You need top designers. You want different sizes because the product has to fit and fit well. You don't want it to seem like you have just like one of this dress and one of that dress. Right? So that was an investment, the inventory. Then another was the technology. Like, we weren't engineers. Many people are. Now we have great tools like Shopify and such, where you can probably get somewhat farther on your own. But we needed to hire a team to build out our website. So those two things alone said like, okay, we want to raise capital from a vc. It's going to be. It's going to be a big chunk. But we could have also thought of angels and strategics and smaller checks. And some of that was making this kind of analysis of what was going to be the faster bullet in terms of, like, our time and usage and kind of getting funded. And that's a personal decision of what's your comfort of the time you're willing to take working on something before you actually see if it's going to, you know, have money to pay you a small salary or have the capital it needs to really grow. And so that's a great example, too, of something I'd put in my calendar and timelines around kind of starting with, all right, let's. Let's say in the next three months, if we don't have a term sheet signed, like, we're going to go and do the other jobs we had lined up post business, and then look backwards and say, well, what does that mean that I need to do Every single week, every single day. And that is how we ran the early stages of the business kind of backing up from that. Having a VC to me also as a first time entrepreneur, lended a stamp of credibility which not only mattered to me to some extent personally, but also mattered in signing an office lease and hiring other employees and convincing many interns to work for us for free initially. And also knowing like, hey, I haven't done this before. So that VC has seen these businesses perform, it's like an additional validation because I know that they see pitches all the time and if they were excited to write us a check and then to be a partner who like truly our first investor is like a co founder of the business who's going to help lend their season more seasoned, you know, it's not just a check, it's that person lending their season experience.
- [39:31]
Beatrice Dixon
I love it. And you also have to know too, when you, when you're ready, when like you decide that you want to go after venture capital, would you say that there's only two tracks, right? Either you're going to take the company public or you're going to exit it. Would you, would you say that, Jenny?
- [39:47]
Jenny Fleiss
For the most part, pretty much, you know, I guess you could buy out the investors and buy out the venture capitalists so that you just kind of retain full control and full ownership at some point or to make that happen, you know, but the acquisition in the same category is like a merger and combining with a company. But that is pretty much the, the decision point, right?
- [40:08]
Beatrice Dixon
Like do I want to do this or do I not want to do this?
- [40:11]
Jenny Fleiss
And do I want to be accountable to like a board? And you know that like we have great businesses, you know, Spanx hadn't raised money for a really long time and there's plenty of great businesses that are run as LLCs and that are run as, you know, family businesses. And that can also fill and drop a lot of happiness.
- [40:28]
Beatrice Dixon
Exactly. So now that you have been a founder of a startup that is now a publicly traded company, massive household name, you've headed up Jet Black with Walmart. So you've lived in this corporate world. Now you're also a seasoned investor, you're actually working with a venture capital firm as one of their partners, do you feel like you bring something that you bring a little bit more to the table? You know, since you have all of this experience. That's not to say now that a lot of venture capitalists don't have experience as founders, but a lot of times they come from the World of finance, right?
- [41:10]
Jenny Fleiss
Absolutely.
- [41:10]
Beatrice Dixon
You're coming from the world of foundership. You're coming from, you know, which is what makes this concept that Capital One and Inc. Have created, you know, around talking about your next move, which makes this concept so amazing because it's a founder talking to a founder. Right. For me, I would think that you would be like the ideal investor because, you know the world. If I'm coming to you from a startup, you know my world, you know what my pain points are. You've been there, you've done that. Right. Do you feel like you bring something different to the table when you're having these conversations? When you're in your boardroom with your other partners and you guys are having a discussion, are you oftentimes bringing something a little different to the conversation?
- [41:56]
Jenny Fleiss
Well, thank you for that. And I agree. Every entrepreneur should come to me and, you know, let me know, give you, give me a crack at their, at their business and partnering.
- [42:04]
Beatrice Dixon
Right.
- [42:06]
Jenny Fleiss
So, yes, I think I bring a different lens and I was fortunate to be able to see what that could look like from that first investor that I mentioned to you. So the first investor that we brought into the business, it was Bain Capital Ventures and it was a man named Scott Friend. And Scott had joined Bain Capital just about a year before he made it the investment Rent the Runway. And he had previously been a CEO and founder of a business that was in the retail technology space and had been sold. And then he moved into the world of investor. So when you're looking for the right vc, it is a really important decision. I mean, that is someone who I still talk to almost every week in some way is a person who's been around the table like truly is kind of a co founder. So being thoughtful about knowing that person, spending the time to know them and the mix of skills they bring to the table is critical. Like I really think a key piece to our success. Seeing what he was able to bring. As kind of both an empathetic entrepreneur who understood where we're coming from in many moments, but also with the real life operational expertise, I was able to see how valuable that was. And it was something that, you know, in my head I tucked away that like, I want to be able to offer that to more entrepreneurs and hopefully female entrepreneurs in particular. And that is the other thing that I'd say is differentiated is there aren't enough women around the investing table and there aren't enough female entrepreneurs. And I think part of that stems from the fact, like I was mentioning with Rent the Runway, where it's often harder for a male investor to relate and get excited about a concept that's oriented towards women. Because don't forget, like if you're a lead VC and you're a partner and I think of this every day, like you need to be fired up about the businesses you choose to invest in and work on because that's going to be considerable time that you spend. Like, honestly, one of my main filters is like, you know, it's like you want to enjoy life, like yes, this should be a great business, but like you also want to truly believe you're going to add value and like enjoy working with this company and this team. And I think sometimes it's harder for a man to do that with a female oriented business. And yet over 80% of E commerce purchase decisions are influenced majorally, major mostly by women. And so you have this actual huge opportunity where we're saying, well, women do most of the transacting and the shopping and in charge of like purchase decisions. And yet like the ability for us to as investors understand the right businesses and entrepreneurs to back to connect to and service that consumer is way underrepresented. So I think it's actually a huge opportunity from like a dollars in investing perspective. But it also, you know, it informs the types of businesses I work with. And I think it's a differentiator of the perspective I can lend having been in that operator seat and connecting with the founder.
- [44:41]
Beatrice Dixon
Yeah, I love that. There does need to be a lot. And you know what, let me take that back. There are so many female founders, right? All of the resources, all of, I mean there's so many beautiful things happening in this, in this startup scene. Are you being responsible? And I'm saying this to you, founder to founder, right? Because I feel like we, especially as female founders, there is a responsibility for us to kind of make sure that we're building up who's coming after us, right. And making sure that we're kind of creating a way because there were humans that created the way for us to be able to do what we're doing. Right. When you're having these discussions, are you finding yourself, I don't want to say more attracted to female founders because you're attracted to a good business, right? You're attracted to humans. But are you finding yourself working to really build up female founders working and educating them on how their investor deck should look, how they should pitch? Like, are you doing a lot of mentorships at this point as well?
- [45:47]
Jenny Fleiss
Absolutely. So I'd say You know, first off, we are lucky that great businesses are often female founded businesses. And the data bears that out and shows that that is often the case, that there is a great correlation of successful financial returns of businesses that are started by women. But generally I just, I do look for a great business. I happen to resonate often with female founders with female concepts. Right. Business, you know, again, because it's both enjoyable for me to work on and I, as a consumer can more quickly get up to speed and relate to that concept. So there's a natural kind of selection process that happens now. I am more inclined to try to mentor and advise and be helpful to women, especially women who worked for me in operating roles who go into entrepreneurship even if I don't invest. Right. Even if it's not something that I think is at the right stage or moment for me to invest in because I was given so much of that help, you know, from the first meeting with Anne von Furstenberg.
- [46:42]
Beatrice Dixon
Right.
- [46:42]
Jenny Fleiss
How gracious was that of her to spend all that time with, you know, two women she had never met? We didn't have any real connection to. To her knowing her before and helping us on our way. And so that is something I take time for. We started the Rent the Runway foundation and a whole program where we support female entrepreneurs that we worked on with the UBS for a few years and really kind of dug in and getting, you know, having female entrepreneurs in our office, working on their businesses and giving them real access to our teams to help their companies and concepts along.
- [47:14]
Beatrice Dixon
What would you say is your next move?
- [47:16]
Jenny Fleiss
Actually, I hope my next move is and continues to be just helping to support this next generation of entrepreneurs and playing a role in this really exciting moment we're in where there's so much change, it's happening so quickly, and I think it can be really beneficial to our entire world.
- [47:36]
Beatrice Dixon
Wow. Thank you so much, Jenny.
- [47:40]
Jenny Fleiss
Thank you so much.
- [47:41]
Beatrice Dixon
Yeah, that's such a great note to end our conversation on. I appreciate you so much for being here with us today to share your story and your business perspectives.
- [47:55]
Sarah Lynch
That's all for this episode of youf Next Move. Our producer is Matt Toder. Editing and sound design by Nick Torres. Executive producer is Josh Christensen. If you haven't already, subscribe to your Next Move on Apple podcasts, Spotify or wherever you listen, your next move is a production of Inc. And Capital One Business.