🎧🍌 Rent the Runway’s Early Days and the Future of Commerce with Co-founder Jenny Fleiss

Rebuilding a month before launch, how to leverage word of mouth, the "show don't tell" fundraise strategy, and why the internet makes it harder to shop

Jenny Fleiss is the Co-founder of Rent the Runway, and more recently started Roll Rider with her three kids.

We go inside Rent the Runway's early days, iterating on MVPs with no fashion or tech background, getting pre-launch press coverage, fundraising tactics, and all their mistakes. We also talk through the unsolved problems in commerce and the latest company she’s building with her kids, Roll Rider.

👉 Stream on Apple and Spotify

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Timestamps to jump in:

• 5:31 How social media was Rent the Runway’s first tailwind

• 7:21 Being early to sustainable fashion

• 9:21 Starting the company at HBS in 2008

• 12:36 Launching with no fashion or tech background

• 14:49 The three biggest early surprises

• 18:44 Using “show don’t tell” to fundraise

• 20:06 Why customer social proof was so important

• 23:04 How they only spent 10% of revenue on marketing

• 25:12 Getting the NYT to cover their launch

• 29:43 Early mistakes

• 31:29 Re-building the product a few weeks before launch

• 33:11 Why building their own logistics was so important

• 38:59 Subscriptions, retail, and other key product decisions

• 45:15 How the internet makes it harder to shop

• 49:30 Building conversational commerce at Walmart

• 53:48 Lessons from starting a company with her kids

• 58:38 Favorite startups in AI and commerce

Referenced:

• Rent the Runway

• The NYT Launch Coverage

• Roll Rider - use code TURNER15 for 15% off!

Find Jenny on X / Twitter and LinkedIn

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👉 Find on Apple, Spotify, and YouTube

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Transcript - (read on Rev)

Find transcripts of all prior episodes here.

Turner Novak:

Jenny, welcome to the show.

Jenny Fleiss:

Hi, thanks for having me.

Turner Novak:

Super excited to have you. We're going to talk Rent the Runway, we're going to talk incubating companies at Walmart, we're going to talk about building companies with your kids, and then some of the different investing and advising that you do. I think good place to start, people are probably most familiar with Rent the Runway. What is it? Can you, if somebody is not familiar, can you give us a quick 30 second, 60 second summary of what it is?

Jenny Fleiss:

Yeah, well, it's great to be here. Excited to share a little bit about the entrepreneurial adventures that I've been on. It did start with Rent the Runway, which is a fashion and accessories rental platform. You can rent dresses and accessories, we also have jeans, and scarves, and vests, and handbags, pretty much you name it. And you can either rent them for a special occasion, like if you're going to attend someone's wedding or you have a special work meeting, even, or you can opt for a subscription service, which means that you have a constant rotation of clothing every month. You can get 10 pieces a month, even more as you want, and it could just be for your every day. So a sustainable way to update your wardrobe in a cost-effective, fun way.

Turner Novak:

And you are still involved, you're on the board?

Jenny Fleiss:

I'm on the board. I call it Board++. I'm still really close with the entire team and our investors. We actually have a photo shoot coming up this week because our 15-year anniversary is coming. We launched the business 15 years ago.

Turner Novak:

Oh yeah, it's like November 27.

Jenny Fleiss:

Yeah, sometime. So at some point in November, I think November 9th might've been the exact date, but yeah, we celebrate it in November.

Turner Novak:

Amazing. Well, and so I guess going back to when you first started it, what was the market like, and then the insight to start willing this thing into existence? Can you take us inside there?

Jenny Fleiss:

Well, entrepreneurship was certainly not as common when we started working on Rent the Runway. In 2008, we started working on the business. I was at Harvard Business School with my co-founder, and I'd say especially on the East Coast, entrepreneurship wasn't as popular as a career choice, and so we stumbled into starting this business. I always had a lot of entrepreneurial tendencies, and it was the greatest gift that, during my second year of business school, I was sitting at a lunch conversation with my co-founder and chatting about a pain point that we had experienced in our own lives of constantly wanting new outfits to wear, often for special occasions, but just generally how this trend of fast fashions are at H&M, Forever 21, was what was solving that use case right at that moment. We were in a moment of recession, people didn't want to spend money on designer fashion and instead, they were buying disposable fashion items that cost less, but still let you play and have fun.

But Jen and I said, it's great and fun to wear these designer looks, sometimes we would borrow from each other, we'd borrow from friends, and we're like, there should really be a service. And what had happened at that time was actually that social media had increased the pain point for a consumers. So you had this moment where recessionary environment is making people more cost conscious and smart shopper focused, but yet, they're putting their image out there on social media. And so they want to look their best, they're putting a brand out there, whether it's for friends or potential boyfriends and colleagues. You're making your mark in this way. And as we started talking to customers, we heard this phrase, Facebook kills outfits. The idea that you wear something and you can't really repeat that look anymore. When we heard it multiple times, and this was really even, this was early Instagram moments, this was not even where we are today. Today, I can barely post something in the morning.

Turner Novak:

So this was when we were taking digital cameras to parties in college and uploading the picture the next day. It was that era, right?

Jenny Fleiss:

A clip. We were still having, we still had phones at this moment, we still had iPhones. This was like 2008, 2009, and there was still a lot of Facebook posting early days of Instagram, but definitely this idea that even women used to repeat an outfit with one group of friends and then another, and you couldn't do that anymore, let alone the fact that you were now showcasing your outfit and your look to so many more people. We were all our own mini celebrities because of social media. So the pain point for customers and the need to have more items was that much more acute and more meaningful as a relative importance in what place to spend money and time in a consumer's life. And so it was this really great confluence of events between this recessionary smart shopper moment and tailwind, as well as the social media tailwind that created a bigger need, and made that the timing for this product that we were working on, Rent the Runway, was going to be more impactful than ever.

Turner Novak:

Was there a sustainability interest from consumers at the time, or is that a little bit more of a newer thing?

Jenny Fleiss:

So it's so interesting because we always knew this was a very sustainable concept and Jen and I always valued and appreciated that, but in the earliest days, for the first probably eight, nine years when we would talk about sustainability or we would ask customers why did they rent? Sustainability was not a factor for them. So as much as we were supporting it from the general business concept of sharing clothing is sustainable, we were using sustainable dry cleaning methods and trying to be eco-conscious wherever we could with our packaging, customers didn't seem to have it as one of the main value propositions that they felt. Now fast-forward it were about 15 years in, it always comes up. It's one of the top three considerations for consumers. So it's cool to see how much our world and our environment around us has accelerated the goal of consumers in aligning themselves with really mission oriented businesses and trying to not just service their need, but also do something good when they have a chance to.

Turner Novak:

Yeah, I was going to say when I was looking at just the company's publicly traded, so my favorite thing is just to Google name of the company and then investor relations. And you can see it's like for startup founders, everyone makes a deck. Public companies also have actually quite a bit of information. And it was interesting, just really quick looking at what's out there. Sustainability, it seems like a little bit of a big angle right now, so it's interesting to see how it's evolved over time.

Jenny Fleiss:

Yeah, one fun thing in particular, we have garment bags that we deliver our dresses in, so we don't use boxes, we actually use our garment bags, and we clean those garment bags and we reuse those bags, and then they become this walking emblem when someone's on the street carrying their bag or traveling with it that you can see right there the sustainability aspect and that someone's leaning into the Rent the Runway sustainable brand.

Turner Novak:

And so when you first started the company, you said it was a conversation, did you say at lunch?

Jenny Fleiss:

It was during the second year of business school, and my co-founder, Jen, had just recounted a story where her younger sister, Becky, who actually works at Rent the Runway, she's worked there since the early days. She had purchased a dress for like $800 that she was going to wear to a friend's wedding. And her older sister, Jen, was like, this is nuts. Why did you buy this? It's out of your budget. You have 100 dresses in your closet you could wear. And she was like, well, this is an important event. I might meet my future husband at this wedding. The idea that these high stakes events, you're at this moment where you've just graduated college, so you're probably at your lowest income earning moment in life, and yet, you're at your highest stakes and most frequent events in your life moment.

And so she was trying to say this was an investment in her life, in her future, let alone the fact that she was going to be photographed in it, and those photos were going to be posted on social media and all these people would see it. And she was really creating her brand, essentially, with these moments she was going through.

Turner Novak:

And so what did you guys do when that came up?

Jenny Fleiss:

Initially, just this, a fun conversation, but we were in business school and we were living through all these case studies of different entrepreneurs and businesses that had been started. And so we very quickly started to say, well, the timing is really special because all these things that Becky, her sister, had mentioned we related to, and we felt that given social media were more important and acute pain points than ever, and then it was a recessionary time. So what had happened during that 2008, 2009 recession was retailers were struggling, designers were really struggling, and so the motivation wasn't just for consumers to find better solutions, but designers needed to find ways to grow and build their businesses, and that meant building access to a younger consumer.

So our actual hook into working with the designer industry, which we were evolving and disrupting that industry, was to talk to them and say, "Hey, this is actually experiential marketing. This is a way for you to introduce younger customers to your brand. This is not someone who otherwise would be able to afford or who would shop from your brand, and they can put on your outfit, they can get all these compliments when they wear it out, they post on social media, they get more compliments. You're actually building your brand. That customer is more likely to purchase something from your brand when they can afford it in the future. And then you're getting the word and the name out there." And that was the value prop on both sides of the equation for the customer and also for the designer that really let us unlock the value and build the business.

Turner Novak:

And could you buy the dresses after you rented them or more of a, did that happen over time?

Jenny Fleiss:

Yeah, that happened over time. So we've continued to, I always say go back to the well of the customer insights. We've always just talked to customers again and again on a monthly basis, constantly. Jen, my co-founder and CEO, was just on a tour of all these college campuses talking to girls about their wardrobe, visiting their closets. There's all these photos she was showing me of her in the closets to try to understand, tell me about why you bought this, how does this make you feel? We're always trying to refresh the business to make it as relevant as possible to our consumer. And so now you can purchase items after you've rented them if you decide you love it and you want to keep it at home.

Turner Novak:

And so you were mentioning before you had, basically, no tech background, no fashion background, but you got this started from a bunch of really small MVPs, initially. What were the first couple test MVPs that you did?

Jenny Fleiss:

Yeah, well, one thing I feel really passionately about is that anyone who has a business concept needs to find a way to test it as soon as possible. And I often say it's not just testing it to validate the business concept and to see if there's product market fit, but it's also to see if you enjoy spending time working on this business. So what did that mean for Jen and I? Well, the first thing was just talking to more friends and people around us. We were at business school, we had our core customer everywhere around us, and so we were asking people at lunch, we were hosting little cocktail parties or focus groups with our classmates, we were sending out surveys with SurveyMonkey. There was always something you can do to immediately get in there. And then the next phase was actually going and setting up trunk shows at different colleges to see if people would rent dresses. So without any technology and without a tech background, anything, we still had ways that we could get moving and we could understand if this was something that would resonate with customers.

Our first trunk shows that we did were at Harvard undergrad across the river, and we knew girls were going through graduation moments. They had a reason to rent, and we set up a shop for different customer groups. We had a sorority come, we had a woman in business club come, a dance group come, and we were able to really see our customer in action and to understand more clearly if they would pay for this product, if they were going to take care of the dresses, if they were going to return the dresses, and to see the other value props. And what emerge actually was so valuable because we saw the transformation that customers had when they put on a great designer dress, they felt like they could take on the world. They were more confident, empowered, they had a more bounce in their step. And we were like, that's our business.

It's not just about the cost or the convenience. It's this crazy thing of women and fashion is if you put yourself together and you feel great in what you're wearing, you actually act different and you have a better optimism and go-getter mentality to take on your day. And so we decided to build our business and our brand around that value proposition.

Turner Novak:

So you had the early, I guess early data. What did you actually see in the data? Was there anything that blew you away like, holy cow, way more people are converting than we think or it costs way less than we think? Or was there any early crazy insights that you got?

Jenny Fleiss:

The biggest insight was really more of that qualitative insight of the emotional connection that women have with fashion. And I'd say also this inkling that women would want to talk about and share the fact that they rented. We weren't sure if that behavior would be hush-hush, but it started to feel like that could be something that was cool and that we could lean into and build brand around. So we started to notice that.

We also noticed some about the different types of customers who were more excited about our business. And we found that actually, some girls who had never experienced designer fashion were the ones who were the most excited and felt that, wow, it is different to wear designer fashion and were able to feel that impact. And then other than that, these were college girls, so we were really surprised to see that they were actually taking care of the dresses. We figured that if anyone was going to destroy the dresses, not return the dresses, it would be college girls. But I think there was this idea of community and gratitude of wearing something that felt so special. It was the way a celebrity wears and gets dressed to go to the red carpet, that we found the dresses were in really good shape when we got them back, and so that was very promising, as well. And so we kept leaning into getting closer and closer to a digital version of what this business looked like, not just something that was a trunk show, but how would this happen online?

Turner Novak:

So it was all entirely offline. It was basically what you'd think of as being non-target customers for designer dresses, but that actually ended up being the perfect way to get the business started. The first pilot stuff?

Jenny Fleiss:

Yeah. It was a great way to get going. And then we created what was essentially a PDF document that looked like a website. And when you clicked at the bottom, you could go to the next page and we let people call in to rent a dress. So we were trying to simulate what if you didn't get to try these dresses on or see them in person, what would that experience look like? And each time we were looking at our conversion numbers, they were always more than we would ever have dreamed or expected, especially when we made that shift from in-person to online, or quasi online, and that all gave us the confidence to raise our seed round of funding and really invest in our website build, as well as our inventory because we knew this business, once we went for it, was going to take really, some real capital for the purpose of building the site and buying dresses.

Turner Novak:

And so you raised, I believe, one and a half million. It was the summer before you launched?

Jenny Fleiss:

We wound up closing in the summer of 2009. We started discussions before we graduated and we raised our initial round from Bain Capital. It was really meaningful that Scott Friend, the lead investor who is still a key part of the business, he actually came to of those trunk shows. So our target customer was definitely not a VC, especially then, but even now, VCs are mostly men in their fifties and sixties. They are certainly not in tune with the emotional connection of empowerment that fashion can have on women. But I think the self-awareness and the willingness to take the time, not just to get to know Jen and I, but to know and see through the eyes of the customer what we were offering, what the value was, and to see our hustle and us in action.

I think now that I've done investing, as well, myself, seeing that a founder is out there pounding the pavement, they're the ones working that trunk show, talking to the customers, passionate about what they're doing, that is everything. And so he took the time to understand our customer and to see us in action as a team decoding this business that we were, then, going to build.

Turner Novak:

And then I know you raised a couple hundred million just over the next decade. What did you learn the most about fundraising? Was there specific strategies or unlocks that really worked for you?

Jenny Fleiss:

I'd say the biggest was Show, Don't Tell, and that's something that has been an important mantra in so many parts of building businesses for me, with venture capitalists in particular, because we immediately realized that they were not our core target consumer. We wanted to always show them that unlock of the emotional connection with women in fashion. And so it was wonderful that Scott from Bain had come to that trunk show, but what we did was we took video testimonials of customers, or even snippets from some of these trunk shows, and we would start our VC pitches just showing those videos to let these, often, men experience and see firsthand from our customer's eyes what that actual value proposition was. Because it's so easy for you to immediately think, oh, it's 10% of retail price, or it takes less time than shopping at a store. But we're like, that's only a small part of it here.

That real connection of empowerment and the feeling of confidence is the main thing. And we've continued to do that to find ways to let our customer and the experience shine through, whether it's pitching to a VCs, pitching to partners, even to our customers. So we introduced photo reviews of our customers talking about their experience renting. So right then and there we're like, this is a new experience renting, so you don't have to trust us as a business. Take it from the words of the customers, hundreds of thousands of photo reviews where they've posted dresses, where they look genuinely fantastic, and they're smiling and they're sharing their height, their weight, their bust size. They're talking about what they wore the outfit to, and it's really inspirational and community building.

And it's another great example of Show, not Tell that, when we launched, it was incredibly controversial and one of the first to market. Many people were worried like, oh, if you post a photo of a woman, does it reinforce the fact that it's a pre-owned item or it might not look as good as on a size zero model? And we were like, we're going for it. The smile is everything, I think, of how a woman genuinely feels, and I think it's been a big part of how we built our brand.

Turner Novak:

Yeah, I think it's true, is seeing someone who is like you or looks like you wearing something, you might be dark skin, plus size, and you don't see someone else in those clothes, you'll be like, oh, those aren't for me. But if you have either of those things and yeah, someone's like, oh, this is my peers wear this, I can use this, this is a product for me.

Jenny Fleiss:

Yeah, I think there's so much that goes into a photo of connectivity, and that was another place where the fact that Jen and I are the end consumer, let us really relate to a woman's decision-making process. We know that when you walk down a street, our tendency is to look at other women and sometimes be like, oh, those are cool shoes, or oh, I wonder where they got that. And there's often something more than just the product itself that's behind that insight. It's like you connect and you know you have a similar body type, or you think they have a cool look and their whole vibe is something that you aspire to. And so we were trying to tap into, it's not just about will this outfit fit? It's, will it look good on me and do I aspire to connect and be like that person?

Turner Novak:

Yeah, that's fair. If you're constantly wearing Rent the Runway clothes and you think you're cool, you think you fit in, you're confident, you're going to keep coming back versus if you don't, you might stop.

Jenny Fleiss:

Yeah, one stat that we started taking note of early on is the average woman who rents the runway and gets 12 compliments, whereas on a normal event, they get two compliments. This is for our event-based business where you're out at a wedding or an event, but the natural conversation starter is often with women like, oh, you look great, and, oh, where's that from? And we knew that if we built a brand where women were excited and proud to talk about it and felt great in their outfit, then it would be such a great word of mouth marketing channel, and that's how we built the core of our business and the most authentic trust that you can build.

Turner Novak:

Going back to the investor relations deck that I looked at, I think there was a stat that said you've spent 10% of lifetime revenue on marketing just over the course of the company. That feels like a pretty good number for a consumer business.

Jenny Fleiss:

It's pretty small for a consumer business. We went years without spending really any money, other than press, for marketing. We just had such a natural flywheel of this word of mouth marketing. It was really what we just felt was authentic to the business, and we had plenty of growth without other means. So for the longest time, investors would be like, what's your CCA, your cost of customer acquisition? And we'd be like, we would scratch our heads, and whether we didn't know at some point because it was so small or non-existent, but I'm really glad that we stayed true as a business to just what felt right versus to immediately start plunging money into paid marketing.

Turner Novak:

Did you lean into anything on the organic or the word of mouth? I don't know, things you did to amplify what was already working?

Jenny Fleiss:

Yeah, I think every time we had, when we launched customer photo reviews, we had a big event and we involved our customers and we did press around the events. We did a cool partnership with L'Oreal at one point because we felt like getting the full look with your makeup and maybe how-tos, and we did some joint press with them. So it was much more around events, experiences, and press that we were amplifying and leaning into it, or creating cool video content where we video to customer talking about their experience, and we might share that on our social channels, but we tried to do things that were a little bit different, and that came from the mouth of the customer as much as possible.

Turner Novak:

Yeah, it's always better when the customer's like, oh, this is a great product, versus the founders or the corporate brand is talking down.

Jenny Fleiss:

Yeah, I think trust is everything when it's especially a digital product. And if you're disrupting an industry, if you're doing something new, there's so many questions customers are going to have and the trust is that much more important that being able to hear about it from a trusted friend or a resource and ask questions is the most impactful marketing that you can get.

Turner Novak:

Yeah. Well, speaking of impactful marketing, I remember you got the initial launch covered by the New York Times, which I don't know if I know of another startup that's done that other than Sam Altman starting a new company or Elon starting a new company. How did you get the launch covered by the New York Times?

Jenny Fleiss:

Yeah, I have the article right up on my wall here. It was pretty wild, but you know what? Sometimes the greatest gift of entrepreneurship is being somewhat naive, and so we didn't even realize quite how wild it was. We were just going for every opportunity. And what happened is we had a wait list for our launch where we were dripping information that we were launching. We ultimately let people sign up to join the wait list, and when we had enough inventory, we would let more people off the wait list, and someone on the wait list had a New York Times email address. And so we directly wound up emailing and reaching out and pitching the concept. And it was someone who totally, a woman in our age group and demo who we knew would really relate to the concept. She had signed up as a potential customer, and so we were able to invite her in, talk to her, connect with her about the business, and then we offered them to come and take photos.

And we had a really cool setup at the time inside of a dry cleaner where we had a rack of dresses that we were storing in this dry cleaner. And every afternoon we would go over as a team and we would fulfill orders out of the dry cleaner. So we would set up our laptop and we had our stack of boxes and we were just getting orders done. And that's where we said, come take some photos. And we knew it was a pretty wild thing that if we were wearing our Rent the Runway dresses and we were up on ladders fulfilling orders, that it would be a fun story, especially for the technology section, which is where we were featured. And yeah, it was such a gift of awareness, but also of just the ability to, I think, be women in the technology industry and category.

And I think often, fashion can be taken as something that's fluffy or lighter or less serious as a business. And I think saying, you know what? This is something that's very meaningful and impactful and has a real opportunity in the world of technology and e-commerce, which was just starting to come online at that time, was pretty special in itself.

Turner Novak:

And then I didn't actually look this up. Did the article come out first or did you launch first or was it same day kind of a thing?

Jenny Fleiss:

It was very similar. Within a few days, we probably had soft launched a week before or something like that.

Turner Novak:

Okay. What happened when that went live? Was that a big impact?

Jenny Fleiss:

So much traffic and demand. But what we were able to do was because we had this wait list, we were really able to throttle and control the amount of customers who were able to rent because we really wanted everyone to have an amazing experience. And I often say, and I worked with Mark Laurie and he says this, too, it's like start with the ideal customer experience and work backwards. And we knew that the ideal customer experience meant we needed amazing inventory, so we needed to partner with brands, we needed full size runs so that you could try out different sizes, and we gave customers the second size for free because we wanted to alleviate the fear of fit and if that was going to be an issue. And so we didn't want people to come on and see that we were all stocked out. It's still one of my pet peeves that there's so many sites these days where you go on and they don't have your size, and it's like, don't people know my size already? Or it's-

Turner Novak:

It's 20, it's almost 2025, yeah.

Jenny Fleiss:

Yeah. We're sending people to space, can't we just not show me sold out items or only take me to the brands that I like and care about. So I think for us, we wanted to always match. It's like a marketplace, so we're always matching the availability of inventory with the number of customers we're able to service.

Turner Novak:

And you feel like people don't do that as well nowadays. Do you just have to stay on top of the demand as it's coming in and appropriately throttle, and I don't know, how would you approach that?

Jenny Fleiss:

I think it's, there's so many people just gunning to acquire customers and maybe the experience that a customer has can be deprioritized in this race to leverage AI or the race to penetrate a market and get quick growth numbers. So I think it's how do you build a quality experience that feels organic and unique and really high value that can be discounted. However, I think a lot of marketplaces are trying to be thoughtful about aligning supply and demand and growing those two things concurrently.

Turner Novak:

Yeah. Is there anything you messed up on there in the early days?

Jenny Fleiss:

Oh my god, so much. Especially on the technology front. We weren't engineers. Unfortunately, I'm still not an engineer, and we assumed it's something that you could just outsource in fork over to an engineering team and write a perfect requirements document. And nothing works like that. Nothing in startup or in life works like that. If you take your eye off the ball, I think then, there's errors, there's things that are going to happen. No one's going to care as much as you. And so we wound up having to fire the engineering team we had hired a month before our launch, and it was really important for us to launch before holidays because people have so many holiday events. Just like this moment, everyone's gearing up and starting to plan and getting excited about their holiday events. We wanted to capture that demand, and so we had to very quickly scramble to basically start from scratch and find a different engineering team to build things.

And we were still bug bashing technical bugs once we launched, the week of launch with customers, it was one reason why a soft launch is a great idea. We were still finding things. And so I think the tech build, assuming that because we weren't engineers ourselves, we couldn't get in there a bit more. You can. You can interview people, you can ask questions, you can see where they're at, you can have daily check-ins and stand-ups as it gets close to launch days.

And then our branding at one point, too. We also, prior to launch, we scrapped all of our initial branding. We felt like it wasn't aspirational enough, and given that we wanted people to feel like this was as if you're a celebrity, and that aspirational feeling was so key to the feeling of empowerment when you put on a great dress, we were like, nope. Doesn't feel right. That's very important, we need to refresh that.

Turner Novak:

Deciding we're about to launch, we're going to rebuild everything and rebrand everything. How did you get comfortable doing that? Did you adjust the launch date back a little bit? Did you just like, all right, we're just going to wing it. How did you make the decision?

Jenny Fleiss:

So the branding was early enough on that did actually feel like a choice. And it was a big, we lost initial deposit and money, it set us back timeline wise, but we also started to see as we were partnering with designers, because we buy all of our inventory directly from designers, we partner with designers, that the branding mattered so much. So I think we started to really appreciate more and more that it wasn't just important for the customers, but it was also important for getting brands to agree to work with us and sell their inventory.

Turner Novak:

Just because you were the brand you were projecting they wanted to align with?

Jenny Fleiss:

Yeah, they wanted to make sure they could trust that experience to be a quality one, and that they were aligned with an aspirational brand. And so in that instance, we had time, so it was more losing, I don't know if it was 30 or $40,000, which was very meaningful to us in the beginning, but we didn't set ourselves back timeline wise. The technology build, we did first push back the launch about three weeks, maybe eventually four weeks. But ultimately, we didn't actually have a choice because it wasn't that we were rebuilding, there was nothing built.

Turner Novak:

Oh, no. Okay.

Jenny Fleiss:

Yeah. Once it became clear that what we thought was being done and built, really, it wasn't give me another week and then I'll show you. It was, no, we didn't have anything. It was enough. And then there was no other choice, and clearly, we were already hitting up against holiday time and it was like we have to, it was a must do.

Turner Novak:

But probably the bigger part was figuring out the actual logistics side. I'm assuming that was actually probably harder than the digital, I'm assuming?

Jenny Fleiss:

There was a lot of hard parts of the business. That was another, it was great to be a bit naive in how hard that was. I actually wound up leading our logistics effort for a large part of the time that I was at Rent the Runway. We started inside that dry cleaner. We eventually had our own facility inside our office in Manhattan, and then when we outgrew that, we were trying to think about do we build our own facility and run this ourselves or do we partner with a third party logistics provider? But we decided that we needed to do this ourselves because reverse logistics, the idea of taking something out and then putting it back in and the quick turnaround that we needed wasn't being serviced by other facilities.

Turner Novak:

Especially in 2009.

Jenny Fleiss:

Definitely in 2009. It's still far behind what I would think or hope for this industry with how much how large e-commerce has grown and how big returns are. It's still a major pain point. But we visited various warehouses, we visited Zappos warehouses, we visited Chegg Warehouse, we visited any warehouse that we thought we could have learnings from, and each time we're like, wow, this is such still a manual process. And it was so mission-critical that we also started realizing it could be a real competitive advantage if we did it well. And so we wound up finding our own warehouse in New Jersey. We decided to vertically integrate dry cleaning and a repair team.

And all this took capital, hence, incremental money that we wound up raising. We took on asset-backed loans as a business, as well, and we were able to build out, over time, automation and different racking systems to more quickly access inventory, barcode inventory to find it and prioritize which items get cleaned, decide different cleaning methods for different items so that we could get more use and less wear and tear of the items, and eventually, even building our own dry cleaning training program so that we had more people who were experienced in dry cleaning in the local area that we could staff and employ because we were renting. We are renting so many units.

So there continued to be challenges, but each one ultimately became an opportunity. It's why a lot of competitors weren't able to succeed, because this is really hard and it was and it is proprietary information. The warehouse management system, the technology that powers that warehouse also is something that we built in-house and continue to iterate on, and it's a backbone of our business.

Turner Novak:

Interesting. So you mentioned a lot of competitors that didn't make it work. Were there a lot of competitors or did people try to copy you or what happened?

Jenny Fleiss:

People tried to copy. Yeah, it felt early on that every quarter, there was at least a new one, and most of them have churned through and not succeeded.

Turner Novak:

And you feel like it was just the focus on, basically, vertical integration and is it big fixed investment, but over time, lower cost per order, essentially?

Jenny Fleiss:

Yeah. I think what it also enables you, I think, fixed investment for the purpose of building out a warehouse and dry cleaning enables you to have more faster turnaround of your inventory so you don't have to buy as much inventory. That's a big benefit, but the must have is you have to get items to your customer when you say you're going to get it to them.

Turner Novak:

True, yeah. That'd be huge for what you guys are doing.

Jenny Fleiss:

Yeah, sometimes you're ruining their prom, you're really disappointing people, and if they feel like the trust is broken or they can't count on you, especially for special events, that's a really big deal and we appreciated that as a business. And so at some volume of scale, it goes back to the no one's going to care as much as you are mentality. There's no other way to do it. At one point, we had five or six different dry cleaning partners, and I remember when you had to find a dress to get to a customer out, you would be literally searching through bins at different dry cleaners trying to find the very specific dress that you wanted. This was especially before barcodes. At some point of scale, you literally cannot, you can't service the customer value proposition effectively unless you're owning this part of the business.

Turner Novak:

Was there a certain moment where you were like, holy shit, this might work. This actually could be a thing. Was there, maybe it was the launch, maybe it was a couple months later, but was there ever that moment where you were like, oh man, we might really be onto something?

Jenny Fleiss:

I think many different moments, and there's such the highs and lows of entrepreneurship that even that first moment of a customer and seeing them transform when they put on a great outfit, and sometimes you need to see it in someone else, even if you relate to it yourself, seeing someone else is really powerful. So that was a moment, being featured on the New York Times and just seeing the engagement and the interest in the article and the concept, starting to see customers post on social media at their own volition about Rent the Runway, the fact that it was working, that they wanted to talk about it, not just to their friends, but they were confident enough to share this where, oh, the timing is right for a movement and industry disruption like this.

And then I think in some ways it happens each day when you see, I still pinch myself when I see garment bags being delivered to a customer's home or people telling me when I run into them randomly, that they're renting the runway and what they're wearing. So what has happened, the industry has really evolved. I think we were the first to market in a meaningful scale way, and now it's an acceptable and valued behavior to be renting, to be wearing pre-owned items more often.

Turner Novak:

Yeah, it's cool now, almost, to be shopping secondhand and wearing secondhand.

Jenny Fleiss:

Yeah.

Turner Novak:

And then what do you think were some of, you maybe hit one with the customer photo reviews, but any other key product decisions that you made over time?

Jenny Fleiss:

So another one was launching our subscription business, which today is the vast majority of our business. And we were at a moment where the business had been steadily growing, but we were thinking about what are the incremental ways to grow? Do you do men's products? Do you go international or do you address your core customer base with more categories and more frequency? And we started as we were, again, going back to well talk to our customers because we don't decide this from some ivy tower, we actually get in there and think about and try to understand from the customers. And we would say, "Okay, why are you only renting once or twice a year?" And people would tell us, I only have that many events. I don't have that many really special, fancy events. And we would say, "Look, well, what about the rehearsal dinner of the wedding you're going to? What about a meeting at work that's a really important meeting? What about date night with your husband? And what it came down to, ultimately, people would be like, yeah, but I wouldn't spend $100 for those moments.

And then we're like, oh, is this a price issue? Because that's a different issue than not having events. And once we unlocked that and did some price testing, then the inventory came up of, well, I need more casual inventory or I want different types of inventory. So we tested around with that, and all that combined led to this opportunity for subscription where we could take that core customer base of women age 18 to 45 as our sweet spot, and we could actually say, there's far more products that you can now engage with at a price that's affordable and have this be part of your daily decision-making set, and I think that's really what catalyzed this as a very normal frequent behavior. We sometimes think about the way you might get Starbucks on a daily or weekly basis. We're like, how do we make this that part of the consideration set in your life, part of your routine?

Turner Novak:

And then you also do some consignment, too, with designers?

Jenny Fleiss:

So we partner with designers in a lot of ways, and we'll partner with them to co-design a dress and collections with them. We also partner with them to reap the benefits of rental from an economics perspective. So we might take items from them, we might take additional items from that brand and say, okay, we're going to revenue share on that item, as well. And so we've just gotten more and more creative with ways that we can serve our customers and also work with our brand partners.

Turner Novak:

And so the benefit for you, probably, is slightly less capital investment upfront to get new designs, and then you're doing a rev share with designer. So then maybe there's some incentive for them, too, to keep the customers coming in?

Jenny Fleiss:

Designers can earn more over time with our revenue share. It also enables us to have additional inventory. So let's say we were comfortable buying at a certain level, but we say, beyond that level, we'll take more and we'll see. let your products speak for itself, especially maybe if it's a brand that we're newer to working with, and we don't yet, have the data to know how well it will rent. So there could be all sorts of reasons. Some brands prefer to work that way because they believe that they can make more money over time, and they've seen that and come to bear, also. If we're launching a new category, sometimes we're like, we're not sure if it'll work, and that might be a way for us to all get comfort and start testing things out.

Turner Novak:

And then you also opened retail locations?

Jenny Fleiss:

Yeah, we did. We did and we have one open right now in New York on 15th Street between 5th and 6th. I started working on retail, gosh, back in probably 2011 or so. And the initial version of it was in our physical office, we had a room, we put a coat of paint, we put some curtains up for dressing rooms, and we put a text box on our homepage of our site, call this number to book an appointment. And it was four flights, a walkup space that people had to go to. And we started seeing conversion rates were incredibly high. People were often bringing a friend, they were often renting for multiple events. Once they got there, they would see a few things that they liked and they would decide to place an order for this wedding they were going to, and then something else a few weeks later. By that point, we launched our accessories, which was like necklaces, earrings, bracelets, handbags, and we had stylists that could help a customer accessorize their look and get the whole look. So they were getting that additional value, so we leaned into that.

And so what we realized was that having select number of retail locations could service a lot of value needs for the customer. It could build the trust and the confidence that something would fit, it could get them more excited about the service and renting more, it could increase our average order value, it could get them bringing a friend and therefore, spreading word of mouth. And over time, especially as we had our subscription business, it could enable people to, sorry, to rent address and then return it in store, and even pick out something new while they were in store, which saves us on shipping costs and a lot of the logistics work, as well. And of course you get a ton of brand awareness, but we always think of our retail stores as a bit different, more like an omni-channel experience where people might be renting online, picking up in store, they might be renting and getting it shipped and then returning in store and picking out something else. So it's a very fluid experience. Very different than I'd say a normal retail experience.

Turner Novak:

Yeah. I have one portfolio company in India that they started as online fashion brand and opened up retail stores. It was just a test and it worked way better, and now it's a core part of the model, and it's basically you run the retail business at breakeven, and then it's like a customer acquisition for the online business. So it's pretty interesting.

Jenny Fleiss:

We had started this business with these trunk shows, and I think there's, whether it's fashion or hair or beauty, I think it's really hard to as fully capture the feeling that you get wearing and looking great if you don't have a physical location. And so I think, to me, physical retail is still undervalued and the halo effects, especially amidst a very crowded marketing landscape, the halo effects and the impact that retail can have, I think, is very powerful.

Turner Novak:

And I think you've mentioned before you think the internet actually makes it harder to shop? That feels like a hot take to me because everyone's like, oh, you could buy anything you want online. Why do you think that is?

Jenny Fleiss:

Well, so this might be a good time to pivot to when I left Rent the Runway, it was to join Walmart. Let's talk about going from entrepreneurial startup to Fortune one retailer. An amazing opportunity to have such mass impact on the world, really. Walmart just touches so many lives and families, and I was brought in to drive digital innovation, not just for that moment in 2017, but to think in the future what was going to happen 5 years, 10 years down the road that would shape how consumers shopped. And part of that was really digging in and understanding from an e-commerce perspective, what were the current pain points?

And there are all of these hidden taxes of e-commerce, everything from carrying a box up your stairs, opening the box, breaking down the box to bring it to your recycling bin, returns, getting something that doesn't fit and having to return it, having to print out a label and find a printer and get the packing tape. And there's all these subtle hidden taxes on your time, essentially. I think even the paradox of choice, this analysis paralysis, where suddenly we have so many options at our fingertips, it takes us a lot of time to decide and weed through those options. So this happiness versus time equation is a little out of whack. It used to be you would go to your local store, you were probably perfectly happy with the set of 10 options that you would find. Now we have so many options that we're left in this spiral of reading reviews and trying to find trusted ways to understand, is this the best product that I can get versus is it good enough to service my need?

And so I could go on. I think there's a lot of things that have sucked some of the joy where shopping, I think, has the power to be a really fun, enjoyable experience that's also memorable versus it's become a chore. It's become incredibly tactical. And I still think that there's few experiences that really pull you out of that feeling, that vibe. And I think it's something that we tried to create within Walmart in some of the work that we did there. I think it's something that Rent the Runway does well and that we constantly think about there. And I think there's more opportunities to come. As I think of the investing and advising work that I do, I think there's a lot more ground we still need to cover.

Turner Novak:

Yeah, I want to talk about that a little bit, but I'm just curious. So working inside of Walmart, to your point, possibly the biggest company in the world, what was that like? Just the process of trying to get things off the ground and then anything you learned?

Jenny Fleiss:

Yeah, it was honestly incredible. It is a fantastic organization. It was always remarkable to me how rich the culture is, how just how much people really love and buy into the Walmart ethos and way of life, how long people have worked there. I think the average tenure is like 12 years or something. You meet many, many people who've worked there their whole lives from working as working the shelves on the floor to someone who's now leading it as an executive within the organization. And there's such buy-in to the principles and the ways of life. Most people have read about and know Sam Walton. The family is still incredibly involved in the company. And so there's this genuine feeling of a personal touch that I think has carried through of caring. I think despite how large it is, to still have an organization that has that feeling of they care about the customer, they care about the experience and the business, and the broader impact has just felt very real.

It was really important in this moment, therefore, of innovating and trying to leapfrog, push our technology forward to also get to value and appreciate the culture that was there and to build the right ties and relationship and trust within the organization. So making sure that taking the time to really unpack pain points that different people in the organization felt, have them understand and feel bought into the work that we were doing in this incubator, it was one of the reasons that I launched the first business in the incubator fairly quickly. It was called Jet Black, and it was personal shopping over text message. We were testing a bunch of different aspects, but what ultimately was a pain point we were trying to service was this idea of conversational commerce.

The idea that you could shop with your voice or with a device like Alexa or Google Home. And it was, how is Walmart going to play in that game in that moment? And what we unpacked in talking to customers with that text message at that time was a very functional tool that was meeting the customer where they were in a way that technology was ready to service. Voice Technology at that time wasn't necessarily good enough. And so the system we built where you could shop over text message with this free form field, almost the way you would with a personal shopper, and was pretty revolutionary at the time. Today, that tool powers Walmart text to shop. So you can still text with Walmart and you can reorder items faster than you might going online that you've purchased before. You can ask for a recommendation for an item, and it has this human experience almost the way someone who is a greeter or who works at a Walmart as a store associate might work with you. It has, it brings back some of that experience in this digital format.

So that was incredibly fun to spend time on, but it did connect to some of the things that I was able to hear and receive were meaningful to employees that were working in the core business.

Turner Novak:

It reminds me of Chat GPT, where it's just you talk and it gives you a response.

Jenny Fleiss:

Yeah, totally. And at the time, it's wild how much things have changed, but that was the dream and the vision and just technology has accelerated so quickly, even since then, that it's all so much more possible. Whereas, it felt like we were really inventing and creating the data maps to enable more automation in those interactions, that wasn't something that we could jump on top of. I think building that today where you can leverage Chat GPT is a totally different ball game where it really accelerates the ability to do something like that.

Turner Novak:

Yeah, and this is a super anecdotal observation, so I don't know if there's, there's probably data out there that supports it, but I feel like especially from older generations, you maybe hear, oh, I don't know how to use that app, or I prefer to talk to someone on the phone versus using a website or whatever. Recent advances in AI, you can talk on the phone to the computer and it might feel like a real person. So I feel like it just enables these new modes that people who may not have wanted to shop online can suddenly be like, oh, just like I'm calling Wally at Walmart and he's taking my order, and then they deliver it and they don't even know that it's AI. Or maybe they do, but they're more comfortable with it.

Jenny Fleiss:

Yeah, I think it's more enjoyable, it's refreshing, it's often really faster. I think it does take away some of the searching independently and yeah, hopefully it makes it more enjoyable.

Turner Novak:

Yeah, it reminds me of when my wife is going to the store, I'm going to the store and you just text a list. It's like diapers, burritos, broccoli, and then it can be like, okay, add these to the list. Just buy it. Yeah.

Okay, so then after a Jet Black and Walmart, you started doing a little bit more advising and investing. How did that switch come about? If I'm a founder who's maybe same position you were in and I want to start doing it, can you tell us how you did it and maybe we can piece together our own lessons from it?

Jenny Fleiss:

Sure. So I started Angel Investing probably, I don't know, while I was still at Rent the Runway, different executives were leaving Rent the Runway to start their own businesses. And when you're investing early on, it's often about the founder and the people. And so I really enjoyed that. I continued to do that while I was at Walmart and it was so fun to be able to see lots of people have these ideas come to reality, and much in the way that I had been helped on my entrepreneurial journey to try to be someone who could leverage my scar tissues and learnings to be helpful, leverage my network to be helpful.

And so I leaned into that and during Covid, and I've been doing that for the past few years. Sitting on the other side of the table, it's been a mix of advising, incubating, there's a business that I incubated called Melody Arc in the customer service space. And then also sprinkling in other ways of teaching about entrepreneurship such as public speaking or starting a business with my kids, which I did ,as well. So that's continued to give me some of the builder entrepreneurial juice, but to teach them by building a business with them about how is the sausage really made.

Turner Novak:

And that one is called Roll Rider. Can you give us the quick pitch and just take us inside how you started that with your kids?

Jenny Fleiss:

Totally. So Roll Rider is a scooter suitcase that you can use as a carry-on for travel. A child can pack it themselves, they can scoot through the airport themselves, it's easy to maneuver, to fold up, has an adjustable handlebar, and then when you're going on an airplane or in a car, you can just fold it up and tuck it away, and it takes away a lot of the hassle and stress that a parent might have when they're trying to mobilize a family with young children through an airport or getting set out on this, what should be a fun, travel adventure, can often quickly become tiresome and stressful.

My children and I, we took our first international trip when my youngest child was less than four years old. I have three kids, and we had tried to use a scooter suitcase that we found actually through the Jet Black Shopping Service that I had bought. We were asking for travel tips and hacks, and the idea of it was so great, we were really excited to use it. Everyone at the airport would ask us about it and say, "That's so cool. Where did you get it? We want one of those." And yet, we tried a few different scooter suitcases and each of them had various flaws and weaknesses that led us to leave them at the hotel or toss them. And we kept trying because the idea was so great, but just the product itself wasn't hitting the mark, or some of them would break after one use and we'd be set looking for the next one.

And yet, we were so passionate about the general opportunity for a business like this. And after about five years of this experience and many scooters tried, I said to my kids, I was like, "Guys, this is how businesses get started. You're passionate about an idea and an opportunity, you see interest from other people, all these people who are asking us about the product, you can create this. We can create this product, we can create the change in the world." And it occurred to me that it was this opportunity for me to help show them how it's done, and to also let them feel that empowered feeling that you can see a problem in the world and make a difference and do something about it, which I think is a broader lesson that I really hope to empower kids with in starting this company.

I knew nothing about creating a physical product, sourcing from overseas, getting freight shipped overseas. I had never built a business on the Shopify platform. There was many new pieces of digital marketing that I hadn't been exposed to when I was working at Rent the Runway. There's been a of new things and firsts for me, so for me to, in this humble way, live through that with my children through every step has been a really cool way to teach them about so many different parts of the business. My son has come to the warehouse to pack out orders with me. We were all on the initial naming brainstorm when we came up with the name Roll Rider. It was with all of us working on that together, the color palette, the branding, and they are the end consumer. So it also hits on this value that I have of learning from the customer themselves and building based on those insights.

Turner Novak:

And I like the name, I'm surprised that name wasn't taken.

Jenny Fleiss:

Thank you. We did have to buy the URL. We worked with a broker, domain broker, but it wasn't crazy priced. And yeah, I'm obsessed with the name. I love it, too. I think it's so fun and it hits the mark on this cool skater type vibe that I think we're trying to empower kids of to be independent and to have this adventure as one of the first grownup type things a kid does is pack for their trip and take a trip, that's a really empowering feeling.

Turner Novak:

And just so people can conceptualize what it is. It is, it's basically a scooter, one of those things you ride on and you kick, but there's a suitcase on the middle pole down the middle, so it's like a-

Jenny Fleiss:

Yeah. So you can go to rollrider.com or Instagram is @gorollrider and you can see, yeah, it's exactly that. It's a scooter with a bag that's attached. It's very sturdy and you can very easily fold it up and change the handlebar height so that you can store it in an overhead airplane bin and use it for all of your travel. So if people have holiday gifting or holiday travel coming up, it's such a game changer for when you're wanting to get to your gate and not carry your child. They can scoot.

Turner Novak:

Yeah, that's actually huge. Yeah, we actually, we have not done any plane trips since we graduated from a stroller on our younger one, so actually, we need to get some of these.

Jenny Fleiss:

Yeah, I'll send it to you and your audience. I'm going to give them a promo code, too, of, I'll do Turner15 for 15% off so people can check it out for their holiday travel.

Turner Novak:

Cool. We'll throw a link in the show notes for people to check it out. And then you mentioned a couple other companies that you've invested in, your advising, and the thing that I like about it is, it's all related to commerce in some capacity. Any other ones that you're really excited about?

Jenny Fleiss:

Totally. So yeah, there's a lot I think still to be done in the world of e-commerce enablement, and I'm excited about a lot of the big picture thinking that I think has been spurred on by AI and this chapter, in particular. So just to name a few, I mentioned Melody Arc, which is an operations platform for customer service. So it layers on top of Zendesk or Salesforce to let you optimize the routing of different customer service interactions so that they're the most cost-effective and the best for the consumer. But it combines AI and agents, so you're never sacrificing that customer experience and personal touch.

There's a cool business called Croissant, which is an extension of this world of re-commerce. And what it does is when you're shopping, it lets you, from a product page where maybe you're purchasing a vest like the one I'm wearing, and it would cost you $600, it says, you know what, if you resell it with Croissant in the next six months, we'll give you $300. And then the price after six months fluctuates just as market pricing would, but you can go into your Croissant wallet in the app and then you just see all of your assets, almost like a stock portfolio, and you can click to sell it any point in time.

Turner Novak:

So there's like a destination marketplace people are going to and buying products that are for sale that are pre-owned?

Jenny Fleiss:

On the other end, not yet. On the other end, they work with other resellers. So it's much more right now, something where you would see the croissant button on someone's page on a product page, and you would just after pay. You would have it clicked and then it would automatically go into your Croissant wallet. You can also sync your email account with your Croissant wallet so that prior purchases, it can scrape the receipts and it can add prior purchases to know what you have. There's a fun styling app called Ulta that uses AI for personal styling, and it can also capture items that are in your wardrobe and suggest other items to complete the look and ingest the daily weather and different activities you might have in your calendar to suggest what you should wear.

Turner Novak:

Is that Jenny Wang's company?

Jenny Fleiss:

Yeah. Do you know her?

Turner Novak:

Yeah, she's awesome.

Jenny Fleiss:

She's great. I'm seeing her in a week, so that's Jenny's company, and I thought that, that technology for a while, a lot of people have tried it, and I think the technology is finally good enough that it's really adding value. There's a fun company called Oway O-W-A-Y, which is ride-sharing for free. So it takes LTL, which is less than a truckload of pallets when you're shipping from different warehouses within the United States, and it lets you book remnant space on a truck. So if you have one pallet and you want to get it shipped, it's much, much more cost-effective to transport that on a truck when there is some remnant space. And obviously it's good for the environment, it lets the truck driver or earn some extra cash, so everyone wins.

Yeah. So I think AI is unlocking so many more ways to optimize utilization, consumer's time to have more cost-effective solutions, and it's cool to see from this side of the table what entrepreneurs are doing with that.

Turner Novak:

So it sounds like if people have anything related to commerce enablement, they need to reach out to you about at least getting your opinion or your take. Sometimes you do some investing.

Jenny Fleiss:

Yeah, I would love that. And then yeah, if you have kids, I think Roll Rider from ages 3 to 12, I'd say, is our core. We're actually selling in Target and Walmart starting this holiday season, so as of November, you guys can go to select Targets or Target.com, Walmart.com and find our product there. So, yeah.

Turner Novak:

Cool. Well, this was a lot of fun. Thanks for coming on the show.

Jenny Fleiss:

Thanks for having me and for all of the thoughtful questions. It's been really fun.

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