It's been a big year for Rent the Runway, the fashion rental startup that recently brought in $70 million in venture capital funding from such investors as Technology Crossover Ventures and Highland Capital Partners.
That money, says Jennifer Hyman, RTR's co-founder and CEO, has gone primarily into building out a new "unlimited" subscription model for casual wear, set to roll out in 2016. In the process, some tension has allegedly ensued.
Within the last year, according to a recent Fortune article, as many as six top executives left RTR -- either by choice, or because they were fired. Those employees include the former chief technology officer, chief finance officer, chief marketing officer, chief creative officer, and chief product officer. Overall, Hyman estimates that 2 percent of the company has left.
A handful of former employees went on to join a Facebook support group, called "Rent the Runaways," recently changed to "RTR Alumni." It was created because, as one former worker told Fortune, "everyone who leaves there has the same PTSD." Three others compared the corporate culture to the 2004 film Mean Girls.
The struggles of growing a business.
The company initially set out to democratize access to luxury fashion brands by renting out garments at a less expensive price point. Now, it's trying to expand by allowing users to rent multiple items, at any given time, for a fixed cost of $99 per month, looking to raise that figure to $129 in 2016. In order to dedicate more focus to "business units," RTR needed to let go of some key executives, Hyman explained in a recent interview with Inc.
"Some of the folks were let go. However, if you're with a company for three or four years, and you've done unbelievable things with RTR, sometimes it's also just about the individual opening up a new chapter of their own life," she said.
In total, 15 former RTR employees have gone on to launch their own startups. When asked to comment on the company culture -- and whether or not it was akin to Mean Girls -- one such expat, who asked to remain anonymous, said: "No, of course not. I think that any company filled with smart, driven women could (unfortunately) mistakenly be characterized like that but I found the work environment there to be incredibly supportive."
"Consciously, as the CEO, my job is to be transparent about where we're going in the future, and all the exciting opportunities, and to have conversations with folks that I've had long-term relationships with, and to understand together whether this is the right place for them right now," said Hyman.
A common inconsistency.
Erika Mendez is the VP of Pyramid Consulting, a staffing firm that works frequently with fashion startups. She says she's worked with some former RTR employees who've made similar complaints about the company culture.
"I've definitely heard that it's not the company they started with," Mendez said. "Unfortunately, that's happened often. In this day and age, and as rocky as the fashion industry is, it's the consistency in service that's going to make you a long-term company."
RTR, it's worth noting, isn't the only high-flying fashion startup to face tough choices this year. Gilt Groupe, the luxury flash-sales site, cut 45 jobs in October, including its chief marketing officer and its head of international business. Nasty Gal, the popular e-commerce retailer founded by Sophia Amoruso, was hit with a lawsuit in June over allegations that it fired staffers simply because they were pregnant.
How to prevent a company culture crisis.
To create a healthy company culture, Mendez suggests hiring for "attributes," as opposed to skill. She adds that training employees well, and maintaining an open-door policy, is crucial -- even and especially when the company grows.
"I'm not privy to what happened behind closed doors at RTR, but there's always a change that happens [when you go from] a small startup to a closed-door office environment," she says.
How to go about fixing it.
If your company culture has gone downhill, there are still ways that you can rectify it.
"It starts with listening to your people. You can learn a lot from having a steering team or panel," she says. Generally speaking, those employees who were with you from the very beginning can help to remind you of your original values.
Since the beginning of this year, Hyman notes that 12 executives were brought into the company -- including a president, Maureen Sullivan, formerly the president of AOL, and Chris Halkyard, a chief logistics officer who previously served as the chief supply chain officer at Gilt Groupe. At least half a dozen RTR staffers were also promoted during that time.
"Making tough decisions early on and quickly is my goal, so that I avoid a situation where we ever have to do layoffs and we ever have to surprise anyone," Hyman continues. "I don't want there to be any surprises when it comes to RTR."
Correction: An earlier version of this article misstated the number of departing executives and a title of one of them. The number is six and the correct title is chief product officer. The article has also been updated to reflect a change in the name of Facebook group "Rent the Runways." It is now known as "RTR Alumni." The article has also been updated to state the current cost of its monthly renting price, $99.