Picking an outfit can be a chore for many women. You open up your closet and scan the hangers, only to find that you have nothing to wear. Or outfits you don’t want to wear. Or clothes that don’t fit.One of the most disruptive startups in retail, Rent the Runway, has been focusing on that issue. What if you could assemble the perfect outfit for an occasion online and rent it for a few days or weeks — rather than buying each individual item and keeping them forever?
“I always thought that fashion was really a suit of armor that you put on before you have the big business meeting that you need to look confident in or the date you wanted to feel beautiful at and that it gave women power,” said Jennifer Hyman, the CEO and founder of Rent the Runway, an online service that rents designer outfits and accessories.
Hyman spoke at Forbes’ 30 Under 30 conference in Boston this October. During a panel on “Fashioning a New Industry,” she shared how Rent the Runway allows women to expand their wardrobe without committing to items long-term. Sara Blakely, founder of the undergarment company Spanx, joined Hyman on stage.
Both women shared their experience building companies around opportunities others didn’t see. They also discussed the importance of honing in on customer needs and creating a strong brand identity.
Finding a Gap in the Market
Blakely had no experience in the fashion industry when she started Spanx, a company that makes slips, tights, and body-shaping undergarments. According to Blakely, inspiration for the company struck during her time as a door-to-door fax machine salesperson.
“One day, I wanted to wear white pants to a party, and … all my undergarments showed under it, and so I just made a homemade solution. I cut the feet off of pantyhose so I could wear the strappy shoes [I wanted to wear],” Blakely said. “[Spanx] started as the need to solve my own issue, and I believed if I had this issue, a lot of other women had it as well.”
In 2000, when she was getting the company started, Blakely said that most female undergarments were being made by men without regard for everyday women’s comfort.
“I would talk to my friends who were models and they said, ‘We get airbrushed,'” Blakely said. “And I’m like, ‘What are you wearing under all these clothes in magazines? Because we’re real women, and we get home and [the clothes we buy] just hang in our closet.’ And that was sort of how the whole moment started.”
As Spanx rose to success, Blakely became the youngest female billionaire in the world. Today, she still owns 100 percent of the company.
Hyman also found her niche in the fashion world when her startup began experimenting with the notion of renting out designer clothing in 2009.
“The vision was for the closet to really go to the cloud,” Hyman said. “[O]ur company was the first to separate the act of wearing [apparel] from the act of owning it.”
According to Hyman, women want to have a wide variety of clothing and experiment with their style. She said purchasing clothing limits their options.
“We have a lot of color. We have a lot of prints. We have a lot of embellishments — things that you always wanted to wear, but you settled for the black version because it made more sense,” Hyman said.
Rent the Runway initially leased designer outfits for special occasions, including galas and weddings, on a one-off basis. Now, the company includes a subscription clothing service. Customers can rent choose between two subscription plan, renting an unlimited number of outfits or four outfits every month. Hyman said that subscriptions, as opposed to one-time rentals, now make up a majority of the company’s revenue.
“Our subscription is growing over 150 percent year over year, so it’s really defied … all of our internal expectations,” Hyman said. “My favorite [statistic] is that the average subscriber uses Rent the Runway 120 days a year… It will forever change the way you think about shopping.”
Spreading the Message
Rent the Runway has 10 million customers as of 2018, according to Hyman. The company has grown from an online-only shopping solution to include five brick-and-mortar locations, in places like San Francisco and Chicago. At these stores, customers can try on outfits in person. Locations are also equipped with self-checkout kiosks, where customers can scan items before leaving.
“We’ve grown the brand organically from the very beginning, so 95 percent of our customers have come to us via a friend,” Hyman said. “You walk into a party [in a red dress] and all your friends notice and they give you a compliment … and you walk in with that extra kind of bounce to your step. That very feeling is what spread the brand from the very beginning.”
Rent the Runway includes an option to review individual items on their website. Using this feature, customers can give the item a star rating, write about their experience, and share a picture of themselves in the ensemble. The post encourages women to share their height, build, bust size, and dress size, so women like them can understand fit.
“[Customers] want to pay it forward to other women, so that other women will feel beautiful wearing that dress, or will be directed not to [rent] that product too,” Hyman said. “A lot of times there’s trust if someone goes to you and says, ‘I’m five [feet] nine [inches] and these pants … run too short. Don’t rent them.’ That’s actually better for all of us. It will direct you to the right thing for you, which is what we’re trying to do.”
Today, Hyman says that 50 percent of the company’s customers post reviews on the site.
Making the Customer Laugh
Blakley said that she started Spanx without much money for marketing. In order to spread the word about her product, she relied on humor — a value that became a part of her brand.
“I named the company Spanx, which made everybody laugh,” Blakely said. “So radio DJs across the country they put me on [air], not because … it was undergarments, but because they wanted to laugh about the name Spanx. … So that brought humor to it and especially into a category that is so boring.”
The company’s original tagline read, “Don’t worry… We’ve got your butt covered!” Product packaging included comic strips inside, and celebrities occasionally flashed their Spanx on the red carpet, helping propel the product to mainstream popularity.
“I felt businesses were all speaking to consumers like, ‘We are the experts, and because we’re the experts you need us,'” Blakely said. “Then I come along, and I literally take a photocopy of my butt in the Spanx in white pants and without — which didn’t look so good. [I] went to Kinko’s, and laminated it, and stood there and showed all my customers, ‘This is my butt.'”
Empowering Women through Fashion
When Blakely started Spanx, she made the decision to take the “feminine approach” to business. “[W]hen I first started Spanx, I was at a cocktail party, and these three guys come up to me… [T]hey go ‘You know business is war,'” Blakely recalled. “I just sat down in my apartment and thought, ‘Why is it war? I don’t want to go to war. I want to do this in a different way.'”
In 2006, she started the Spanx by Sara Blakely Foundation, which donates to charities dedicated to uplifting women and girls — including many that focus on encouraging entrepreneurship.
The Rent the Runway Foundation also seeks to empower women in business. Launched in 2015, it works to “inspire and ignite the next generation of female entrepreneurship,” according to the organization’s website.
According to Hyman, her foundation has worked with thousands of entrepreneurs across the US, of which 50 percent are women of color. Both the company and the foundation are dedicated to diversity. Hyman said out of Rent the Runway’s 1,500 employees, 80 percent are women.
“We need more women who are taking their companies public, making multi-million dollar outcomes for themselves, and for their majority-female teams,” Hyman said. “We’ve been diverse from the beginning, and we’ll be diverse [to] the end, because no one wants to work in a place where they’re the only one.”
