The closet-in-the-cloud fashion-rental firm faced cutbacks due to Covid – but its Irish office proved immune
Rent the Runway founder Jennifer Hyman does not mince her words when speaking about the importance of the US company’s Irish operation: “We hit the jackpot coming to Galway.”
The growing office in the city’s Claddagh helped the disruptive closet-in-the-cloud fashion phenomenon through a very tough year, she tells the Sunday Independent on a Zoom call from her home in Brooklyn, New York.
With its customers staying indoors due to the lockdown, the New York-headquartered clothing rental service saw its valuation slip from its previous $1bn mark to an estimated $800m today.
The past year has proven to be one of reinvention for the firm, says Hyman – and its technical team in Galway has been at the heart of that.
At a time when the wider organisation had to undergo cuts of 50pc, the Galway office kept on hiring – and Hyman has no intention of putting a lid on that growth. It currently has 50 staff in the West of Ireland office, with almost half of those joining during the pandemic.
And the US firm now has plans for continued job growth in 2021 and beyond, says Hyman.
“It’s just the most lovely group of people that we’ve ever worked with. If I could I would 10x [increase by tenfold] the office. It’s just great, warm, fun, funny. Good people. We really feel like we hit the jackpot by choosing to open the office in Galway.”
Rent the Runway continues to have an ambition to roll out its services in Europe, but there are no concrete plans just yet. The firm had already turned the US clothing and fashion market on its head, with its Netflix-style subscription service for designer labels. Hyman first came up with the idea in 2008.
“We experienced rocketship growth trajectory pre-Covid,” she says. “Our subscriptions were really taking off and there was mainstream adoption, with people using our service to get dressed for their everyday life.”
But when Covid hit, the firm faced an immediate existential crisis.
“We had to make some very difficult decisions right away and cut our costs throughout the business, so that we could have the financial runway to withstand what we thought would be several years of impact,” says Hyman. “We cut about 51pc of our op-ex and cap-ex, our inventory expenses, and people expenses as well. So we had to make difficult decisions related to layoffs, furloughs, and salary cuts.”
The one part of the company that was immune from cuts was the Galway office, despite the fact that it had only opened its doors in April 2019.
“We did not want to cut headcount in our Galway office. Our team there is involved in some of the most important technology projects in the company that we knew we needed – both in Covid, and in things we could likely accelerate during Covid.
“You know, periods of lower demand give a business like ours a chance to make process improvements – to our technology and to our operation – in a way that we hadn’t for 11 years prior, because of the continuous growth.”
But it was not just that Galway happened to be working on crucial projects. The new office had quickly proven its worth and had already expanded its remit. It has continued to hire staff throughout the past year, and that is set to continue in the months ahead.
“Initially, we saw Galway as just a centre for software engineering. But our Galway team is involved in everything – from the engineering behind our financial systems, our merchandising systems, they’re involved in our customer service systems, data science and our operations system. So they’re in all of the mainframe software that really powers Rent the Runway.”
Hyman says that it quickly became apparent that its first overseas office was a big success.
“It’s the quality of the talent – I mean incredible talent – and this has so many positive halo effects from a cultural standpoint.
"The team in Galway is so collaborative and was so easy to integrate with our teams throughout the United States. It does not feel like it’s a team across an ocean from us.”
Hyman says that Rent the Runway has experienced “a dramatic reacceleration” of the business over the last few months.
The primary reasons people joined Rent the Runway pre-Covid were related to wanting to wear something new every day to the office, or for special occasions.
“People were looking for a more efficient way to get dressed, because a lot of our customers are busy – they might have jobs, or have kids, and this was a more seamless way for them to have a rotating closet.
"Now, in addition to those reasons, we see a lot more customers coming to us because this is a more sustainable way to get dressed.
"For the past year or more we’ve all been trapped in our homes, staring at closets filled with stuff that we don’t use – that we bought in the past, that were kind of wasteful. This is a way to have a sustainable closet in the cloud.”
The idea for Rent the Runway originally came to Hyman based on a conviction that people now value their experiences more than the things they own. She believes this is accelerating now due to Covid – and is to the benefit of a subscription service such as Rent the Runway.
“This year has locked us away from the people that we love. I believe that, coming out of this, we will value that time that we have with people that we love, and our experiences with them, in a much more meaningful, dramatic fashion.
"If there was ever a kick in the butt that we needed to make us value our experiences over our stuff, it’s been this last year.”