Tuesday 12 November 2019

US guru's Galway share-wear success

Styles-for-hire entrepreneur Jennifer Hyman is one of only a handful of women to grow a startup into a billion-dollar 'unicorn' success, writes Fearghal O'Connor

Jennifer Hyman, CEO and co-founder of Rent the Runway.
Photo: Boyd Challenger
Jennifer Hyman, CEO and co-founder of Rent the Runway. Photo: Boyd Challenger

An elderly man scratches his head through his woolly cap as he stops to stare at workmen putting the finishing touches on to the Piscatorial School restoration in Galway city's Claddagh. "What's it going to be?" he asks. It is the new European office for Rent the Runway, explains a PR woman who is here to facilitate the visit to Galway of Jennifer Hyman, the founder and CEO of the billion-dollar New York-headquartered clothing rental service.

"There'll soon be 150 people working in here," the PR woman says. The man is impressed. The landmark school building had once been a dole office, earning the moniker 'the Claddagh bank'.

What will all these workers be doing, the man wonders? The PR woman explains that the jobs will be mainly in technology: "Rent the Runway allows women to rent items of clothing online through a monthly subscription service."

"Rent their clothes?" he asks, with a disbelieving shake of the head.

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Inside, the building has been transformed into a high-end office full of collaboration space, and eye-catching art and furnishings. Hyman sits in a small, glass-walled office, dressed in the sort of elegant designer outfit the availability of which for a monthly fee has driven rapid growth in Rent the Runway's subscription service.

"I just got back from maternity leave a few weeks ago, so I certainly enjoyed the benefit of not having to buy clothes that I was never going to wear again," says Hyman. In March, nine months pregnant, she closed a $125m (€112m) funding deal, giving Rent the Runway a $1bn valuation and unicorn status, alongside previous startups like Airbnb, Uber and WeWork. Hyman is one of fewer than 20 female CEO founders to achieve this status. "I have a very long-term vision for Rent the Runway," she says. "I see this as a new form of dynamic ownership for all of the things in our lives and our homes, that we don't have to use 365 days of the year.

"We are trying to build a new relationship between a customer and the things they use in their life, taking the burden of ownership away from customers and, instead, giving them the joy of usage. So you still get to wear and use the items that you love. But you don't have to do the heavy lifting of owning it forever, of storing it, cleaning it, refurbishing it. We carry that burden for you."

As well as more than 600 brands of designer clothing for women, the site offers children's clothing and homeware. But everything from menswear to the art on the walls of your home is under consideration.

Galway is very much at the heart of this vision, says Hyman. The new office will house a team of product and data engineers, and is to become "a second world headquarters". She says: "This is not a back-office; 150 staff is just for starters and I don't see a reason to put a limit on it.

"From the moment my CTO set foot in Galway, he knew we had to be here. Galway feels very creative and that is very much our ethos. Although it is a city, it still has a community feel to it. The idea that we could be a part of that was very exciting."

But, for now, the service is not available in Ireland or elsewhere in Europe: "For the foreseeable future, the customer base is going to remain in the United States, to scale our business there, to capitalise on the sustainable fashion revolution that we've pioneered."

But, she says, part of the Galway office's remit is "to figure out the right approach to launch in Europe, (as) Europe is a completely different can of worms to the US".

She is well aware that expansion brings challenges. That very morning, Rent the Runway had announced it was once more in a position to take on new subscribers after days earlier dramatically putting the brakes on. Logistics problems had delayed orders to some customers, causing social media to light up with complaints. A report on the Today show followed and the Wall Street Journal declared it was suffering "growing pains".

Hyman sees the furore as a sign that "we've really created a movement here".

She adds: "I remember when Amazon didn't deliver packages at Christmas a few years ago, and it didn't get as much coverage as Rent the Runway pausing for one week." The company had rapidly agreed to refund impacted customers and to pay them $200 compensation in cash: "When a company makes a mistake, they often give credit, but we decided it was our responsibility to rebuild trust with customers and that we would give them cash."

Despite the hiccup, Hyman believes that within 10 years, the second-hand clothing category - including rental and subscription services - will overtake the fast-fashion model, that sees vast amounts of cheap clothing bought and discarded as quickly as the next trend hits the catwalks.

"We see ourselves as a substitution for fast-fashion. We've seen a radical change in behaviour in a very short period of time," she says, adding that many of her customers now use the service for clothing items on more than 100 days of the year.

"It's comparable to Spotify and how it changed the consumption of music. At first, customers continued to buy music as well as subscribe to Spotify, because they were unsure. Then, at a certain point, we all stopped buying music and we trust that Spotify will give us unlimited access to all the music we ever want to listen to. Now, consumers listen to a lot more music because Spotify gives them the freedom to discover."

Similarly, Rent the Runway "removes the shackles of having to buy something that you know you will own forever". "And that freedom enables and encourages people to take chances on things they wouldn't have worn before; to explore new trends, to explore new brands, to explore different sides of their personality. It brings back what fashion is meant to be, which is fun."

Hyman had always longed to change the world. A decade before coming up with the idea for Rent the Runway, she had studied public policy as a Harvard undergraduate, editing the college newspaper and dreaming of becoming a journalist.

"Part of what made me passionate about journalism is what made me passionate about being an entrepreneur. I was always an observer of other people and culture, and how things were changing. I was the sort of person who could be in a room of people and understand what people meant, as opposed to what they were saying."

But after watching the horror of 9/11 unfold during her senior year, her attitude changed.

"I ended up writing my college thesis on how the mega-merged corporate structure of the American media had actually deprived the public of hard news related to September 11."

She felt the way the media sensationalised the event did not chime with her ideas of the sector as a public good, and journalism lost its appeal.

"I was so disillusioned that I felt, if I'm going to go into something for the purpose of making money, let me just make money."

She changed course and took a job as a strategy analyst at Starwood Hotels. There, she created a honeymoon registry, developing a stand-alone business that still exists today: "I pitched that idea because I believed the world had entered the experience economy, where people were starting to value experiences over ownership. Instead of pots and pans, people wanted an amazing honeymoon."

Hyman later studied at Harvard Business School and on a Thanksgiving break at her sister's home, came up with the idea for Rent the Runway.

"I was staring into my sister's closet. Despite her many dresses, she had just bought another dress for a wedding that was more expensive than her rent, putting her into credit card debt."

Why, Hyman asked herself, if a dress was only going to be worn once, could it not be rented?

"I had this realisation that my sister purchased this very expensive dress because of the experience of walking into a party and feeling self-confident.

"Nothing about the ownership of the actual dress was important to her at all. In fact, after the emotional high of walking into the party, the dress was essentially dead to her. It would sit in her closet almost as a museum to that one event."

It was 2008 and the social media era was just beginning, heaping more pressure on women to wear something new at every event.

"Women globally are judged for the way they look way more so than men are. Women are expected to have more variety in their wardrobe.

"A man can get away with showing up to work every day in a blue button-down shirt and khaki pants, and no one would think twice. Whereas, if a woman showed up in the same outfit every single day, the HR department might start wondering."

And a 'pink tax' on women's clothes means that they, compared with very similar men's clothes, are generally 30pc more expensive.

"There's a huge amount of power and confidence that women derive from expressing themselves the way they want to the world. To democratise that feeling is part of Rent the Runway's mission so that every woman, no matter how much money she has, can afford to dress how she wants and present herself how she wants."

Rent the Runway, she says, is offering a sustainable version of fast-fashion for the 21st century: "In addition to a fiscal responsibility to shareholders, a business has to be a force for good. CEOs need to do a lot more than just try to make money."

Other powerful CEOs, of course, have faced criticism as their big ideas have swallowed sectors whole and disrupted the world around them.

"That description certainly is not one that I think is related to me," says Hyman. "Companies have responsibilities. If you produce a product, like a social network, that changes the course of world events, you actually have a moral responsibility for that. And as a leader at that company, you should be thinking beyond how much money you're making. We've seen that technology, left unchecked, will not check itself." But for the engineers and data scientists who will soon inhabit Galway's Piscatorial School, changing the world - at least the one that exists in our wardrobes - is exactly the task Hyman will set them.

Curriculum Vitae

Name

Jennifer Hyman

Age

39

Position

CEO and co-founder (alongside her friend Jennifer Fleiss) of Rent the Runway

Lives

Brooklyn, New York

Family

Married to film and TV editor Benjamin Stauffer (who once spent a year studying in Galway). Two daughters, Aurora (2) and Selene (five months)

Education

Public policy degree from Harvard, and MBA from Harvard Business School

Previous experience

Strategist at Starwood Hotels, and director of business development at talent and sports agency IMG

Favourite book

She Said by Jodi Kantor and Megan Twohey (about the breaking of the Harvey Weinstein story)

Favourite movie

Dirty Dancing

Advice for young women starting a business

"Be aggressive. If you're not super-aggressive about going after your dreams, they're not going to happen. You're likely to have to be even more aggressive than some of your male peers. Lean into that."

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