In this talk Jennifer Hyman, co‑founder and CEO of Rent the Runway, explains how the company discovered its core demand driver—word‑of‑mouth and the emotional thrill of wearing a rented dress—through simple, low‑tech observations rather than big‑data analytics. She describes a series of small‑data pop‑up experiments that tested key assumptions: whether customers would rent without trying on, whether dresses could be shipped and returned via mail without damage or theft, and how the most demanding users (sorority partygoers) would treat the inventory. By framing the dresses as “Ferraris” she convinced male venture capitalists that high‑value items would be cared for, turning a potential liability into a selling point. On the supply side, Hyman recounts cold‑calling top designers, notably securing a meeting with Diane von Furstenberg within 48 hours of the idea, and using that feedback to address designers’ fears of brand dilution and cannibalization. She emphasizes that early‑stage founders must continuously talk directly to both demand (customers) and supply (designers) sources, turning those conversations into data that guides product decisions, fundraising narratives, and growth strategy. The talk closes with a parallel to Yelp’s early days, underscoring that regardless of role—engineer, marketer, or designer—direct customer interaction is essential for building a sustainable business.
Chapters
If Rent the Runway was just about saving money, no one would really talk about it. So just to provide an example, have you ever bought something at the, at the Gap or at J.Crew, and after you bought a sweater, taken a photo of yourself and gone on Instagram and said, hey, just bought a new sweater from the Gap? No one does that. 80% of my customers When they rent The Runway, they take a photo of themselves and they post it on Instagram or Facebook, and they tell everyone they know they rented The Runway. That is because they feel awesome when they do it. So to this day, 97% of my customers have been driven by word of mouth. That insight was critical to find in the very beginning of the business. And by the way, that insight didn't take any technology to find. It didn't take any work except giving a girl a dress and watching. And a lot of people talk about the importance of data, big data. When you are starting a company, what is really important is small data. It's observing the customer, understanding what their emotional response is, having a conversation yourself With the customer, figuring out what they like and what they don't like about what you're offering. And when we figured out this insight at our first pop-up, we decided, okay, MVP approach, right? What did we learn in the first pop-up? How can we have a second pop-up that teaches us an answer to a new question? So at the second pop-up, where we put out these 120 dresses to a new group of women, We didn't allow them to try on the dresses at this pop-up because we knew that our company was going to be on mobile and it was going to be online and people wouldn't be able to try things on beforehand. And we wanted to figure out what's going to happen to conversion if you don't— if you let them look but you don't let them try on. Then we ran a third pop-up where we wanted to figure out, can we actually ship inventory through the mail? So we would give everyone a return envelope and via USPS and have them drop it off at a mailbox afterwards. And we wanted to figure out, are people going to steal from us, or will these dresses be able to ship via the mail? Are they going to get damaged? And one of the other key things we did is we made sure that one of these pop-ups, when we went to this Harvard college, we went before the end-of-the-year parties, end-of-the-year sorority parties, end-of-the-year graduation parties, because I knew that one of the big questions from VCs was going to be, Well, whatever. Aren't these dresses going to get so damaged that you're not really going to be able to turn them and actually make enough profit off of your inventory utilization? So I decided to go to the potentially worst customer in the world, a sorority girl, and figure out what would happen after she went to a huge frat party and potentially drank a little bit too much and threw the dress on the floor at the end of the night. I wanted to see what condition the dresses would come back in. And I figured out from this experiment that people actually really take care of things when they have an appreciation for the aspiration of that brand. So how I described this to these male VCs— male venture capitalists didn't understand how a sorority girl could wear a dress to a party and have that dress come back in perfect condition. And I said, hey guys, Because the rooms of VCs are all men. Think about the difference between if you rented a Chevy for the weekend from Avis and how you would treat that car, and potentially you'd throw your suitcase in the backseat and your fast food wrappers on the seat, versus if you rented an Aston Martin for the weekend, or if you rented a Ferrari. If you rented a Ferrari, you would make sure that it was pristine. pristine, that it was in perfect condition. You would drive it around your neighborhood. You would make sure everyone you knew see you in the Ferrari. You would take photographs of yourself in the Ferrari. I'm like, Rent the Runway dresses are Ferraris, and that's why people are taking care of them. It's all of those insights. First of all, gaining your insights from your customer and then figuring out how you're going to translate those insights to the audience, which is the venture capital audience. And putting it in their terms. So that was kind of the demand side. The supply side was, will people send us inventory? We had to make a case that we could convince all of the designers in the world that we were going to increase the total addressable market for fashion, that we were going to introduce the next generation of women to their brands. and not cannibalize their retail sales. So what we decided to do is we decided to just start cold-calling designers. And we had no fear. We really didn't think about how famous some of these designers were or should we have a whole presentation ready. 24 hours after I had the idea for Rent the Runway, I sent Diane von Furstenberg an email and I asked if I could have 5 minutes of her time to meet with me. Diane von Furstenberg is a very famous designer. She runs the Council of Fashion Designers of America. And lucky enough, she saw this email and she responded, I'll see you tomorrow at 5 PM. So 48 hours after having the idea for Rent the Runway with my sister, I was in Diane von Furstenberg's office introducing myself as the co-founder of Rent the Runway. A lot of people would have waited Months to do research, to put together a PowerPoint presentation, to get all your ducks in a row. It's like you can't wait. You just have to go out there, start acting, start figuring out how people are going to love or hate your idea. And that meeting with Diane von Furstenberg was critical because she didn't like the idea. And The conversation turned into a conversation where she gave me critical insight as to why she didn't like the idea. Hearing from people what they don't like about your business is going to be the most important thing initially for you to actually reframe what your— what the mission of the company is so that you could actually build a real business and then pitch it well to the investment community. So the major point that Diane said is she said, you know, I don't like the fact that you're gonna cannibalize my retail sales. You're gonna dilute my brand. I don't even know you. Like, you didn't work in the fashion industry. Who do you think you are? And— but she did say that if I could get women in their teens, 20s, and 30s to be excited about her brand and to fall in love with her brand, that would be interesting to her. OK, so why is this important in terms of a conversation about fundraising? Because before you get a seed check from any venture capitalist or any angel, they are going to try to answer those exact same questions about your demand and your supply. And who do you think they're going to call? They're going to do due diligence up the wazoo on you. So had I not gone out to designers and started having these conversations with them, my venture capitalists would have. And they would have called these designers and gotten the exact same response. So now I understood what the pain points were for designers. I understood what the mission of the company had to be and how we could actually work with designers to help their business. So then kind of taking it to— okay, so you glean all of this data about your demand, your supply, you run a whole host of experiments. For people who are engineers, you build something, you have people actually respond to it, you launch it out in the atmosphere, and you start to get some feedback. You always have to talk to customers. So it's not enough, even if you build something and put it on mobile or you put it online, like, it is not enough to see what your traffic is or what— how many, you know, uniques you have a day. You actually have to figure out who your customers are and get them in a room and talk to them. I was actually just at a conference yesterday, and Jeremy Stoppelman from Yelp, who is an engineer by training, was telling a story that When they first launched Yelp, he just wanted to focus on iterating the product and making it better and different. And he had a marketing guy who he had launched the company with, and the marketing guy was like, let's go and meet our customers. Jeremy's like, nah, I don't really want to meet the customers. And the marketing guy forced him to go in and meet the customers, and he found out why people were actually engaging with this product Yelp and why they were writing restaurant reviews. And that insight insight helped him build one of the most amazing products out there that's changed the way we interact with our local communities. So whether you are a marketing person by trade, or you're an engineer, or you're a designer, you must, at the beginning, meet with your sources of demand and your sources of supply.
