The pitch would have written itself. "Netflix for Clothes" founders Jennifer Hyman and Jennifer Carter Fleiss might have written on their pitchdeck, and investors would have known exactly what they were talking about. It would have worked too. When Rent The Runway finished its funding Round D at the end of 2014, investors gave the pair another $60 million to expand their warehouses, broaden their range of dresses and accessories, and bring in new customers. The investment brought the total amount of funding the two Jennifers had received to $115 million, and valued their firm at $600 million.
Each retained a 13 percent stake in the company, making them both worth around $78 million.
The company's concept is simple to understand. Customers pay $129 a month to rent up to three fashion pieces at a time. They can send them back any time they want using prepaid packages, and receive the next piece on their lists. The system works in exactly the same way as Netflix's DVD mailings worked in the days before the company started streaming.
It's one of those ideas that make you slap your forehead and say, "Why didn't I think of that?"
And the answer is simple too: if you're a guy, you probably didn't need it.
Jennifer Hyman has explained that she got the idea for the company after seeing the amount of money her sister was spending on new dresses. At a time when every party dress appears on Instagram and Facebook, it's harder than ever for women to wear the same outfit twice. An easy way to rent outfits for special occasions--or even for daily office wear--looked like a good solution.
But guys don't feel the same pressure. No one cares if we wear the same jacket to a business event or turn up in the same suit. Heck, when Mark Zuckerberg can boast of having a closet that contains of nothing but identical grey t-shirts, it's clear that male entrepreneurs can get away with wearing anything. So male entrepreneurs were less likely to spot what has turned out to be a $600 million business idea that's already generating annual revenues of around $100 million.
There's a lesson there. When we're fishing around for business ideas, it's tempting to think about trends and market size and marketing, and all of that is important. (Jennifer Hyman and Jennifer Carter Fleiss met at Harvard Business School so they also knew how to do the research and actually make things happen.) But businesses only succeed when they solve a problem and it helps when you can see that problem right in front of you.
There are a lot of multi-million and even billion-dollar ideas that are growing and developing into huge companies but you didn't think of them because it wasn't you who needed them. But you do have problems right now whose solutions would make your life easier, cheaper or better. Identify those problems that really affect you, plan their solutions, and you too will be writing a pitch for a multi-million dollar company.