May 17, 2017 | By WGSN Insider
Big data meets consumer insights. Experience WGSN.
Jennifer Hyman is one of just a handful of female founders that has received over $50m in funding for her business, Rent the Runway.
She took to the SXSW stage to discuss female entrepreneurship, seeking champions over mentors and what other industries she’d like to see disrupted.
1. Rent the Runway is the largest dry cleaning business in the country
That’s some feat. This is a vertically integrated system aiming to mazimise the lifetime wears of every garment. Efficiency is key: there’s a zero day turnaround time intended with strict quality control. “Building out the technology and the logistics to do that has been unbelievably fun, challenging and an adventure. Thank goodness it’s been so hard because that’s why we don’t have any competitors,” said Hyman.
2. Good old-fashioned word of mouth works
Hyman had two major fears when Rent the Runway launched – that women would think it was disgusting to wear something someone else had already worn, and that if they were complimented at a party they would merely say the designer of the item and not advocate the fact they had ‘borrowed’ the piece. Actually the opposite happened. Women shout about the fact they’ve got it on loan. Last year over 95% of Rent the Runway business was driven by word of mouth, said Hyman.
3. The shipping system needs to be ripped up
One of Hyman’s biggest statements was around the state of shipping in the US. “We need to put FedEx and UPS out of business,” she demanded. Costs for both are constantly on the rise for Rent the Runway despite how much they ship, so she called for start-ups to disrupt the space; for the system to be “ripped up and recreated” in order for e-commerce businesses to have sustainable profit margins. “We need to get the level of e-commerce across the board up from 10% of total retail sales to 30% or 50%, and the only way that is going to happen is if the delivery method changes.”
4. Data is pivotal in fashion
“The reason data is so much more important in fashion than in any other industry is because there are no blockbusters in fashion. If I recommend a blockbuster movie to you, 95% of the time I’m going to be right [that you’ll like it]. There’s a much higher chance of success there than with an item of clothing. Data is the most important aspect to personalised, competitive online retail,” Hyman explained. Rent the Runway uses data to sift through and offer recommendations, but also to price by demand. It likewise offers that data back to its suppliers and designers, helping to inform them on what the five million customers using the site are doing related to their brands. “That’s a big sales asset for us.”
5. There’s a difference between mentors and champions
“When you get any sort of VC funding or seed funding, everyone in the world wants to help you, mentor you,” Hyman commented. But she emphasised someone that can give advice is not the same as someone who can pick up the phone and intro you to someone to get you to the next stage with your business, to help open doors and champion you. “That’s what will help women become more entrepreneurs.”
6. The VC nature of pattern recognition is dangerous
“I want to challenge this nature of pattern recognition – it’s dangerous,” Hyman declared. This is about venture capitalists investing in proven industries and proven business models, rather than new ones. But Hyman also insisted half the battle is about convincing VCs to invest in female entrepreneurs full stop, especially if the product involved is something they’re not personally interested in (that being fashion in this case). She pushed airbnb as a prime example of a success story that potentially only worked because its founders were men. This is a business that now sells as many rooms each year as the Hyatt hotel group does. “Did anyone see the pattern in airbnb when it launched?” she asked. “Thank god the founders were men because someone gave them funding for what was an obscene idea.”
Know what’s next. Become a WGSN member today to benefit from our daily trend intelligence, retail analytics, consumer insights and bespoke consultancy services.