Jenny Fleiss, the co-founder and former head of business development at Rent the Runway, is onto her second act. After helping to grow the fashion rental service to a reported $100 million in revenues in 2016--and finally turn a profit--she stepped down at the end of March, and has been eager to get back into startup mode.
Fleiss has been tapped to head up Wal-Mart's Code 8, a stealth company based in Silicon Valley that aims to create more personal, one-to-one shopping experiences through artificial intelligence and machine learning. The startup falls under the umbrella of Store No. 8, the retail giant's first-ever technology incubator, created in an effort to compete with Amazon's e-commerce business.
"I'm happiest and my best self in the early stages, when you're wearing lots of different hats," Fleiss tells Inc. of her decision to join the incubator. She adds that a fresh set of eyes are often helpful when disrupting an existing industry. "At the Rent the Runway, we didn't have fashion or technology backgrounds, and now at Wal-Mart, I'm working with a major retailers across many categories that are new [for me.]"
The opportunity came via Marc Lore, Fleiss' long-time mentor and the founder of Jet.com. Lore was last year tasked with leading Wal-Mart's e-commerce division, when the retailer acquired Jet for $3.3 billion. Over the past several months, Lore has focused on capturing market share from Amazon, by acquiring retailers including ModCloth (fashion) and Moosejaw.com (outdoor gear.) The company is also reportedly in talks to purchase Bonobos, the men's clothing startup, for as much as $300 million. Also in an effort to ramp up e-commerce, Wal-Mart recently introduced a free two-day shipping service for orders of more than $35, and worked to increase the number of items available for purchase online to more than 35 million--up from just 8 million in 2016.
Still, Wal-Mart trails Amazon by a lot. Last year, Amazon's product sales were $93.7 billion, while Wal-Mart saw just $14.4 billion, according to the research firm eMarketer. "We're behind," Lore admitted, speaking at the Code Commerce conference in Las Vegas last month. "We need to catch up."
Thus the appeal of Store No. 8, which plans to nurture dozens of startups that--while notionally independent--will be wholly owned by Wal-Mart with access to its coffers. Although Fleiss wouldn't comment on what exactly her startup is working to build, or how it plans on generating revenue, she says she's been given carte blanche to hire her own team and run the business as she otherwise would. "Our world is flooded by a plethora of choice, where you look for a product and get so many items, and part of [this] is making it easier and more convenient," she says of the services she plans to build.
Fleiss also admits that there's a certain amount of relief in working under the umbrella of a larger company that's flush with capital. When starting out, "the biggest pressure is funding, in that you need to reach a certain milestone before you run out of money," she says. "Your bank account is this ticking clock, and it drives decisions that might not be in the best long-term interest of the business."
Fleiss declined to comment on how much funding Code 8 expects to receive from Wal-Mart, though says that the amount is substantial.