Jenny Fleiss, the co-founder and head of logistics at fashion rental service Rent the Runway, knows what it takes to scale a business. Her company is said to be valued at around $600 million and is reportedly on track to generate more than $100 million in sales this year--up from just $28 million in 2013.
Still, Fleiss recognizes that the odds are stacked against most women founders. While women are starting companies at twice the rate of men, less than two percent of women-owned firms reach $1 million in sales, according to the Kauffman Foundation. What's more, women capture only around 10 percent of global VC dollars, according to TechCrunch data. That's something that Fleiss anticipates will change if Hillary Clinton wins the election next month.
"It's so cool that there is going to be a female president," Fleiss said, speaking at the Project Entrepreneur summit in New York City last week. "For women to see that there are no limits and no boundaries--which is very much the way I was raised--that's what helps [them] to start thinking and dreaming every day. That's what's needed for women to create companies that are huge and scalable and game-changing."
Project Entrepreneur is a series of networking events and a pitch competition, hosted by the Rent the Runway Foundation and financial services firm UBS. The New York conference brought together 200 women entrepreneurs, who were encouraged to apply for a spot in Rent the Runway's five-week accelerator program. The program gives three women-led startups each $10,000 in capital and a year's worth of mentorship with the Rent the Runway executive team. One of the the winning startups from last year's event later scored venture capital funding, while another was recently accepted into the lauded Y-Combinator incubator program.
"I think Hillary Clinton has definitely shown us the importance of having thick skin in order to plow forward," Fleiss continued, nodding to criticism the nominee has received during her campaign. In a subsequent conversation with Inc., she reflected on some of the biggest challenges she has faced steering her company over the past year.
On reaching profitability:
Fleiss tells Inc. that Rent the Runway has had some months in the black of late, but isn't feeling pressure to make profitability the company's No. 1 priority. "I think there's understanding that sometimes there's a longer road," she says, adding that her investors have placed an emphasis on increasing revenues.
To that end, Rent the Runway is continuing to launch brick-and-mortar retail locations where customers can rent out items of clothing they'd selected online, or browse new garments in-store. Fleiss explains that the stores are designed to entice customers who are otherwise uncomfortable renting clothing online without seeing or touching it first. About half of foot traffic comes from new customers.
"Retail can, or cannot be profitable," Fleiss says. "We made the decision to have our stores be EBITDA-positive in 18 months. So everything from how we designed them initially, the money we would put into the setup, was all with that goal in mind. And so far we've been able to meet that."
On the key to opening brick-and-mortar stores:
With more than 90 percent of retail sales still being made in physical stores, according to Forrester research, it's unsurprising that Rent the Runway has become the latest startup to move from e-commerce to the brick-and-mortar space. Still, as Fleiss notes, there are a number of difficulties that come with this transition.
"The biggest challenge is staffing," she says. "It's one thing when you have a unified website and everyone is coming to the same destination. But once you've got a team of people that are just out there, the onus of training them and hiring adequately is really important. And you have to scale that quickly."
On maintaining the company culture:
Rent the Runway, which started with a mere four people in 2009, now counts nearly a thousand employees. Last year, the company brought in several new executives, including president Maureen Sullivan, who previously served as the president of AOL. (It also saw several executives depart, including CTO Camille Fournier and CFO John Rucker.) At the time, the company's co-founder and CEO, Jennifer Hyman, cited a need to for an executive team that "oversaw business units."
With all that change, Fleiss admits, it has been hard to maintain the company culture. "We definitely had a period where we hired a lot of new people, and the people who were there previously weren't right for the stage we were at with the company," she says. It helps that Rent the Runway had inked a set of "core values" in the early days, which Fleiss says it stills stick to.