What's the hidden business behind your business? w/Rent the Runway's Jenn Hyman

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The Venardos Circus, the magical, musical, traveling circus of your dreams. One of the catchphrases I've used to describe it. Actually my favorite. Of all of them is Yeah.

The little circus that could. That's Kevin Venardos. Ringmaster and founder of the Vernardo Circus. Yes. Circuses.

Can be startups too. Before he started his travelling circus. Kevin. was already at the top. I got a job out of college as the ringmaster for the Ringling Brothers and Barnum Bailey Circus.

I had found a dream that I never had that kind of came true. Oh, it really did come true. I was at Madison Square Garden with the greatest show on earth. Yeah. When the greatest show on earth. took its final bow. Kevin

set out to build a stage of his own. Years later. I started a little show. I convinced the LA County Fair to buy a show that didn't exist yet.

And then I went out and made it happen. It was a 30 minute Circus musical. and a hundred and twenty degrees outdoors. And me and a small cast put on a show That is like a musical with aerialists and acrobats and lots of laughs and daredevil stuff and heart.

The Vernardo Circus started touring And never stopped. And Kevin Learned. Just as all startup founders do.

That running a successful circus. is more than just tight rope routines. And acrobatics. Kevin had to master location scouting. Ticket sales.

And venue permits. Just to name a few. He started hiring. Fast. I have a digital ringleader.

who is in charge of our online world. We also have a full time PR lead. I also have a tour manager. He's the guy who's working with me on Permiting, and that is a full-time job, let me tell you.

And then I also have uh operations director on the ground with the tent. Ah, the iconic circus tent. A perfect place to peek inside. А гіднес Behind the business. Kevin knows how vital it is. Yeah.

I think it's one of the most exciting parts of the experience that I provide people is Seeing that tent at a distance, In a circus. The tent.

is a business unto itself. And for the Vernard circus. To thrive. Kevin would have to master it. First of all.

Where to set it up. I and my team Have Identified locations and that people might not have known.

How valuable they could be. Once you find a good spot. You have to get the tent. There. Most other circuses there's dozens of semis. Dozens.

It takes them a couple of weeks. to set that tent up. And they're not making money while the tent is getting set up. We can put up our little tent in four hours. We have one.

Semi And now it's time to set it up. Kevin. and his team of performers had to master this art as well. And it might be

The hardest part. It is a pole tent. They're two king poles. There's 22 poles around the outside. Each of those poles goes down to a plate that has three stakes in it. So that means with 22 poles, there's 66 stakes on that t. They get driven into the ground with an electric jackhammer. Down. Usually is a couple of guys it takes to be driving. If it's a rough surface like asphalt, we would lay out a ground cloth.

If it's uh fresh cut grass and there's no obstruction, we might just put the tent top. right down in place. We connect all the ratchets and the webbing around. We raise the poles on the outer edge of the top. Once those poles are sort of loosely hanging there in place, the two king poles rise up in position. Used elephants were used and there's a wheel that sits at the bottom of each of the king poles. So as the thing rises up into the air, we pull it up into position and we get the top in place. Then you hang the wall and uh add the trim. And then we all as a team tear the tent down and move on to the next city.

Kevin has to know the tent business as well as he knows the entertainment business. Because when it all comes together. It can be a magical thing. We just finished a long tour. And uh sometimes you get tired. Um

But something about the circus. Always has made me Wake up the next day. And want to try again. Because it's worth it.

It's worth all that sweat and the blood and the tears is worth it. I wanna bring them. Into a world of dreams. And magic and wonder. And I want them to bring their families and I want to create memories for them there.

that will draw them back year after year. As Kevin Vernardos has learned, going from ringmaster to To mastering a business. is so much more than walking a tightrope. that crowds may be delighted by the aerialists.

Clowns and dancers. But what's happening behind the scenes. is just as important. That's why I believe you need to master the business.

behind your business. It just might be The critical factor. That let you break out.

You gotta have incredible talent at every position. Huge push. There are fires burning when you're going out. Can you believe it? Such an idiot. And then you go back to this is totally gonna be amazing. There are so many easy ways. I have no idea what to do. Sorry, we made a mistake. But you have to time it right. Like, well that's just how you do it. We haven't made it. Just how you do it. This is masters of scale.

I'm Reed Hoffman. Co founder of LinkedIn. Partner Greylock. And your host.

You need to master the business. behind your business. It just might be the critical factor that let you break out. Every business that's achieved huge scale.

Fueling it. Behind the scenes. Often looks very different.

than its public facing side. Think of Amazon's Massive warehouse operations. Or The assembly line.

that builds an iPhone. To put it in tangible terms. Picture a high-end restaurant. You walk in. To delicate ambience.

Gracious Wait Staff. Mm. and gorgeously plated courses. Excellent tannins. It's pronounced tannins. That's exactly what I said.

But behind that dining room. It's a furiously bustling kitchen, fire and steam. Also Daily shipments of fresh vegetables. Early morning fish markets.

and the waste removal service that hauls everything away at the end of the night. Imagine that restaurants owners want to branch out. Start a franchise. Conventional wisdom says To take that leap in scale.

They should outsource every backhand system they can. From linen supply. to reservations. But that only works if they also identify what part of the business behind their business makes them who they are. Is it their ability to import exotic wine?

farm to table produce. Whatever it is. That's the part of the operation. they need to invest in most heavily. Because that's

What will set them apart. And if that business behind the business. grows robust enough. It might even become a standalone success. Think of Amazon.

Building AWS to show up their own internal systems. than launching it as the platform that generated and captured. Forty eight percent of the cloud market. I wanted to talk to Jen Hyman about this.

Because her company rent the runway. Has achieved unicorn status. By mastering the business. behind their public facing operation. And the two are about as different as you can possibly imagine.

Rent the runway. Let's customers rent a single dress. For a special occasion. Or subscribe monthly. To create a kind of closet in the cloud.

For their customers. Rent the runway offers access to glamour. But underneath the stylish marquee business. is the largest dry cleaning operation. In the world.

And also A bottomless well of product data. Which skirt is a hit with customers? Where do they wear it? How many times can it be cleaned before the buttons fall off?

No one knows this. But rent the runway. And that data is deeply valuable. To partners.

Because of all this, Jen explains, Her company. has to be a tech ford. as it is fashioned for it. Rent the runway.

is very much a technology business. It always has been. Eighty percent of our corporate employees are Engineers, data scientists, product managers. We have very few people that are in what you would think are the traditional aspects of what Rent the Runway would be doing, which is merchandising and marketing. The first C level hire that I made was a chief data officer. And he was in my first 10 employees. So from the very beginning of the company, we were thinking about data.

Later in the show, we'll dig into the nuts and bolts of the data business. behind Jen's business. But first Let's take a look at how she found herself poised at the nexus. Of aesthetics.

And logistics. When did you Start thinking that you might be an entrepreneur. I'm still thinking whether I'm an entrepreneur. I actually thought that I was gonna be a journalist.

As an undergrad at Harvard. She was editor-in-chief of their daily student paper, The Crimson. She prepared herself for a career news. But then The first day of my senior year of college was September eleventh, two thousand one.

And I ended up writing my thesis on how The mega merged New structure had framed the content that we received. Мідія організацій звер

business organizations now, that they had cut investigative journalism, they had cut international bureaus, and therefore we received a very sensationalistic news package in the first few weeks after September 11th. What I find interesting in the story is that even before she graduated, Chien was keenly aware that А the scaffolding behind the products we consume.

In this case. T V News. She recognized that the behind the scenes business was Drove the end result. Jen took a job at Starwood Hotels after Harvard.

It turned out. To be a serendipitous time. I saw that the world was completely changing, and especially my generation. They were starting to value experiences like travel. over ownership and that was actually changing the hotel industry.

Six months into her tenure at Starwood. Jen had an idea. I went to pitch the president of Starwood. And I asked him for two million dollars to start. A honeymoon.

Registry. Yeah. where couples could register for their honeymoon and their friends and family could give them room nights and massages.

as opposed to registering for pots and pans from crate and barrel. Jen was discovering one of her great strengths that that would go on a server at rent the runway. an ability to spot shifts in the culture that create opportunities. In this case.

Jim saw the experience economy coming. And she thought the hotel industry had a new role to play. That's What she told the president. of the company.

He didn't really respond in the meeting. He didn't say yes, he didn't say no. But I went back downstairs to my boss after the meeting and I said He approved it.

Ha ha ha. And I proceeded to spend the next three and a half years at Starwood building. This business for them, so I became an entrepreneur. Jen's exact tactics aren't for everyone.

But I admire her persistence. And that persistence also got her to the next stage. Implementation. I had to learn how to work with an engineering team to build an entirely new way of selling travel and how to integrate with partners, how to think about the creative associated with this entirely new brand. What Jen just summed up in one sentence.

are actually three distinct businesses behind the business. Working with engineering. to make sure the technical framework is there. Working with partners. To ensure they benefit.

and don't undermine it. And making sure your customers are drawn to your idea. You can think of these as legs on a stool. If one of them is wobbly.

So is your product. Starwoods honeymoon registry launch was not wobbly. In fact. Oprah named it as one of the most innovative ideas of the year.

and the project survives to this day. Jen left Starwood after three years, and After a sequence of roles, Found herself at Harvard Business School. In search of her next step.

What she found. was her co founder. Jenny Fleiss. I'm not sure that I ever would have founded Rent the Runway had I not met my co-founder because she was such a galvanizing force in turning this from a fun school project into an actual Business.

The story Fun school project. Rent the runway can in.

And with good reason. It's a classic. Entrepreneurial. Light bulom. I was home in November of two thousand eight for Thanksgiving in New York City.

And I was with my younger sister Becky. And She had just purchased a A forty five hundred dollar Dress.

That put her into credit card debt? And it was multiples of her rent at the time. I was yelling at her as her older sister that she should return that dress that she just bought and wear something that was already in her closet. And I was staring at her closet and she was like

Everything in this closet is dead to me. I've been photographed and everything, the photos are up on Facebook. I need to wear something new. The clothing itself, the closet was dead. Енсо ідея That I had is what if the closet was a living thing?

What if this closet that we each have in our bedrooms all over the world could adapt to Two changes in the weather. Changes in our mood, changes in our lifestyle, changes in our size. Why is it that we have this closet that's a museum to who we once were? Jen took this idea. O a living closet.

to our HBS classmate. Jenny Flice. As with any great co foundership. Jenny encouraged Jen. Take her idea.

And turn it into something concrete. Even in the earliest phase. as you're dreaming about everything your new business will do. Someone on your team. should be focusing on how it's going to work.

The first step Was for Jen and Jenny. to get perspective from someone in the fashion world. And I said, Well, we should probably call Dian von Furstenberg. Because she knows a lot about the fashion business, she was the president of the CFDA.

CFDA Council of Fashigners of America And Jenny was like, Well, do you know Dan van Furstenberg? And I said that of course I did not. Like any entrepreneur with crit. Jen was determined to find a way.

That afternoon, Jenny and I wrote a cold email to twelve different iterations of DVF at DVF.com. One of those emails was correct. Incredibly. This method worked. They got through to Diane von Furstenberg.

And shared with her their vision for the company. So describe that meeting. Describe the pitch, her reaction. And what the iteration look like. So we pitched this idea of a white label solution on her website.

We said what if we powered the back end enabling You on DVF Даum to actually rent your product. What I want you to notice is that Jen's first concept for the company was very different from what they ultimately built. She initially pitched a behind the scenes operation. Maybe it was her past life as an entrepreneur at Star Wars.

Certainly. It was a savvy move. To crack into the fashion. Through an esteemed Iconic designer.

Regardless, it shows one an early understanding for the business of how And not just The business of what? That's important for any founder. Who wants to move from idea

A deep abiding interest in the process And not just the end result. can motivate you. When the going gets tough.

Like when a Diane van Fstenberg Tells you. No. She said, I don't like this idea of you piloting it on my side. I would only do this if Other brands did it too.

And in a sense, she kinda gave us the permission in that meeting to go off and be our own. Sight. Rent and runway's first industry contact. had inadvertently provided them with a new business model. Why be the rental service?

For one brand. When you could do it for twenty brands. Or fifty. But it was their second call. They would reveal to them.

how they would do it. After we had this meeting with Diane and we were like, you know what? This let's do this. And I thought who is apt to hate this idea the most? It's gonna be a traditional department store. The second person that I cold called Was a guy named Jim Gould, who at the time was the president of Nieman Marcus.

This, by the way, is a highly unusual approach. For a new entrepreneur. Asking not just Who will love this idea? But

Who will be most threatened by it? It goes along with my constant reframe to founders. Invite others. To poke holes in your idea. And no one's more apt.

To poke holes than someone who may not want you to exist at all. Jen saw big name brick and mortar department stores. Not only is there competition But as powerful gatekeepers that could cut her off from potential suppliers. Because if Neiman Marcus tells a designer

They shouldn't trust her merchandise to rent the runway. That designer. Well listen. I understood that the fashion industry was one that was based on A handshake and trust and

relationship. Because how else can you sell a piece of leather for four thousand dollars and convince people to actually buy that? You are investing In your brand. And so you're gonna safeguard that brand. You're gonna safeguard who gets to distribute it, who gets to carry it.

Jen gathered up her courage. And met with longtime Nevan Marcus president. Jim Gold. And I went down to meet him at his office in New York City. And I said, Okay, what if I were to take Design your dresses at the exact same time that they're being sold in Neiman Marcus, and I were to rent them for five to ten percent of the price.

Two customers. And His response to me was. Well, women have been renting the runway for my stores for decades. It's called

Buying a dress. Keeping the tags on. And returning it to the store. I said. How often does that happen?

He said, It actually happens seventy percent of the time. And I was like Okay. Why on earth Do you let that happen? If you know that people are stealing from you 70% of the time.

Why is it happening? He said well. The same customer who's renting from the dress department is buying ten pairs of shoes downstairs. We actually can't stop the behavior because it's our best customers who are doing it. This was not. an ideal situation for any department store.

Perhaps it's better to suffer repeat customers' bad behavior. Than to lose them. All together. There was kind of an entitlement. to this behaviour.

That I thought was really fascinating. This idea, like I'm spending so much money in this store, I deserve to be able to keep the tag on. As Jen talked, To the heads of other department stores like Macy's and Saxfifth Avenue. She started to understand the scope of the problem. The dress problem

Wasn't limited. to a single shore or chain. It was pervasive. Predictable. And so far

Unavoidable. It was so clear to me that this behavior of rental was happening. Already and that it was widely known to To the retail world. And in fact, whereas I had suspected that department stores would initially be scared of us, the way they thought about it was, Oh, here's a site who's who might take away our worst customers. This realization was crucial to the way Jen built up.

Not just her main pitch to suppliers, but But how she could ensure she had the blessing of the very stores she thought would be her main antagonists. They gave us permission to survive at the beginning. Because when we approached designers like DVF, the first phone calls would always be to the CEOs of Neiman Marcus and the CEO of Sachs.

And They were like Yeah, you know what, I've met Jen Kinda like this idea, you should try it. Right at the beginning. Jen was looking to shore up.

One of the most critical businesses underneath her business. The relationship trade. Relationships are the engine that powers every business, of course. It's how you establish your supply chain. As well as your customers.

But Jen had observed that in fashion this was especially true. Where brands matter. As she mentioned earlier. A strong brand. Is what moves.

four thousand dollar. Pieces of leather. I could have very easily gone to third parties, gone to retail stores, bought inventory on sale, and populated my site initially with the exact assortment that I thought my customers would want. But I had this very long-term point of view that we were gonna build this closet in the cloud. And that the relationships with the industry would be critically important.

This long term view. is one I wish more entrepreneurs would adopt early on. Because the business behind your business is not always easy to retrofit. It's much simpler.

More elegant. And cheaper to scale. At the same time. You're scaling your public facing brand. In Jen's case, she wanted to build in those relationships.

From day one. After the break. We'll take a deep dive into the business. behind the business. and rent the runway.

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learn more at creative planning dot com slash masters of scale The Wired Newsroom is known for award winning reporting on how technology shapes our world. On Wire's Uncanny Valley, we take that curiosity even further. Each week, journalists from Wired break down the biggest stories in tech while speaking directly with the people building, challenging, and reshaping the future. Is the AI boom sustainable?

How do you protect your privacy in an age of constant surveillance? Uncanny Valley tackles the questions driving today's tech debates and lighting up your group chats. Listen to new episodes every Thursday. Wherever you get your podcasts. Humans will never be more intelligent than AI. There's gonna be two types of companies.

Those are great at AI and those that went out of business because they weren't. How do we build a future? That is human centered. I'm Rana Al Khayubi. And on my podcast Pioneers of AI, we answer that question and so many more. As an AI scientist, entrepreneur, and investor, I know what it takes to build AI that works for everyone. Every week I sit down with the pioneers shaping our future.

and we take you behind the scenes of the AI that's transforming our lives. Find pioneers of AI wherever you tune in. We heard how Rent the Runway figured out its customer facing business. Now we're gonna fast forward a little. through rent the runways seed round and V C funding.

And inventory stocking. into their high profile launch in november two thousand and nine. Through some scrappy list building efforts and old fashioned hustle, They manage to get placement on the front page. Of the New York Times business section.

As well as A hundred thousand. Brand new sign ups. Positioning Rent the Runway as a tech company. As well as a fashion concern.

was by design. Jen recognized That female entrepreneurs get short shrift. In this space. A two woman co founding team in the New York Times tech section.

Would stand out. But also The mechanics of the service were newsworthy. Innovations like an integrated reservation system are or the ability to book backup sizes.

Or providing an option for free. Fast returns. And maybe most importantly, the The guarantee that the dress a customer receives is clean, Stay free,

And functional. With all zippers working. And nothing stretched out. The customer experience of Rent the Runway. Is

Not the website or an app that is Easy. Yeah. The customer experience is receiving back millions of units of worn clothing. Capturing data.

On those units. Restoring them to perfect condition, dry cleaning them, repairing them, reassembling them with new units, and shipping them out often with a zero day turnaround time. We also understood from the very beginning that if we wanted to create a brand that people used and would recommend and that was aspirational, that we had to control the end to end experience of ensuring that the clothing actually looked great. When it went out

And that It was perfect. So as promised, let's take a good long look under the hood. At the business. Powering this business.

The business of a hundred percent returns is one that traditional WMS systems were not accounting for. WMS Warehouse management systems And so we've had to build all of our underlying logistics technology from scratch. I really did think that we were going to

part of our technology stack. I thought that we'd be able to outsource potentially our dry cleaning at the very beginning, and I'm like, Wait, that that is The business. As technologically advanced as rent the runway's operations are. The most important quality control functions.

Come down. To expressly human tasks. Like. Smelling. There's nothing that replaces a sniff test. Uh-huh. There's nothing that replaces a visual

quality inspection of being able to zip something up and move the zipper down. seeing if the hook and eye can close, stretching the material out and seeing if there are small holes that you wouldn't have noticed via the technology. I think that This is a business where specialized labor has to exist in our warehouses. Making sure they have access to this critical specialized labor.

Isn't as easy as it sounds. In fact. It's a major consideration and we'll rent the runway. It's massive distribution centers.

It's actually hard to find people who are expert seamstresses. It's often a trade that is passed down from generation to generation in certain communities. The same thing with spotting, the same thing with dry cleaning. The talent Recruiting. And retention. Is even more important.

As it relates to my hourly employees. than to my corporate employees. This is such an important point. A consistent misconception among entrepreneurs is that finding skilled hourly labor Is easier.

Then filling the C suite. This is clearly false. And it's something that Rentha Runway recognizes. Last year, the company made a policy that their hourly workers would receive the same benefits package as their corporate employees. A move that's so unusual in the garment industry.

Not to mention the tech industry. The reaction of the factory workers themselves was Complicated. I thought that the reaction was gonna be like euphoria.

The reaction was actually Shock? And scepticism. There must be a catch. Mm.

And I had to work hard over the next few months to prove to my team no there's no catch. In fact, you already have these benefits, you can start taking them, you're not going to be punished for them. Eventually. The skilled laborers. did start using their benefits.

Which besides being the right thing to do. Also help secure the critical foundation of the Rent the Runways behind the scenes business. Because it is these team members repairing and restoring the clothes to rent the runways. painstaking standards that gives the company its edge. Jen knew this service was so important that

It was worth. Building themselves. They could have simply Farmed out this work. To outside partners.

Instead. They made it a pillar. of operations. Jen isn't the first entrepreneur. To make this type of decision.

For another example. We can look to the messaging juggernaut. Slack. Here's Slack founder, Stuart Butterfield. Recalling the birth.

of their current business. It just so happened to have risen from the ash of their gaming company that made a game called Clitch. We're in an interesting position where We still had five and a half million dollars or something like that left in the bank.

So we didn't have to shut down. And I think that there's a a real temptation to go to the last dollar and hope that there's some kind of hail mary that will save it. The good thing about shutting it down early was that we had the ability to just not do anything for a couple of months. As Stuart and his team. Plan their next steps.

They turned their attention to an internal messaging system they developed. So when we first got started, the natural thing for us to use was a very old Internet protocol called IRC, Internet Relay Chat. So predates the web by a couple of years. And because it's so old, it misses a bunch of features that are now considered just standard. So one of the things it misses is store and forward of messages. So if I want to send you a message and you're not connected at the moment I want to send it, I just can't. Like there's just no way for me to do it.

And so we built a bot that would log all messages that were sent when you were offline so you could read them when you got back online. And Once we had that, we're like, Oh, oh, it would be super convenient to be able to search these messages and since we already had them in a database, it was easy to search them. The more Stewart's team built up their message relay system, the better it got. And the better it got.

the more people used it. It wasn't something that we thought about or talked about. It didn't have a name. It was just in the background. Without giving it a name. Slack was born. To help a specific team excel.

Stewart's own team. So it was time. To find his next big thing, he needed only to look in his own backyard. In the same way. Jen was starting to realize the value of her underlying business.

Not only had her company perfected the art of cleaning, repairing, Yeah. And shipping. Millions of outfits per year. They had also figured out something foundational.

How to turn that process into data. The way that I make money is about asset utilization.

So my asset is a sweater. My asset is A coat or a dress. And I need to understand that asset down to the factory it was made in, the stitching that's used, the fabric that's used, what kinds of chemicals I should use in a dry cleaning process, how do I repair it, how do I store it, how do I care for it, in order to maximize the IRR on that unit over time. and how to extend the duration of its life. And so the DA.

That we are capturing on the inventory. And how that flows through the technology is actually what enables us to make money. Calculating the IRR. or internal rate of return.

is the initial reason for collecting this data. After all, you want to be able to rent that sweater as many times as you can. Without Sacrificing the user experience. You want to know how long it will take before that sweater wears out.

Which the team In the rent the runway warehouses. We'll be carefully noting. You also want to know How is that sweater reviewed?

How did actual customers look in it? Did it fit as expected? That type of data. is collected too. Voluntarily.

Input. By the customers themselves. Users. Can post photos of themselves wearing the items. They can list their own height.

Age, body type. And whether the outfit was a success. Remember how Jen talked about fashion. Running on trust? I understood that the fashion industry was one that was based on a handshake and trust and

Relationship. When customers share their experience of the product. That both represents trust and And leads to trust.

Any dress can look great on a model. But a dress that looks great. On a real person. Who wants to share it? That builds trust.

In the service. And the brand. These insights are essential. to Jen's client facing business. But now that you have that data.

You have that data. And who else might need it? Your suppliers. The designers.

The manufacturers who made the sweater in the first place. The richness of that data. Not to mention its sheer volume. would become a competitive advantage. If you're a best in class retailer.

And you're selling Apparel. Maybe. You're getting data. Four times a year.

After something is sold and it's in a customer's closet, it's essentially a black box too. You have no idea if that customer ever wore that sweater, how many times she wore it, did it really fit her. We are getting data from our customers. Over a hundred times a year. And She's telling you.

Did she wear it? How many times did she wear it? Did she love it? Did she like it? Was it just okay? What occasion did she wear it to? And all of that data that we receive, we're able to port back both into what we buy or manufacture in the first place, to how do we clean it, how do we increase the ROI on that unit, and how do we Now fill in the gaps demand that we see. We know more about what women want to wear.

than most retailers on earth. And that has given us power now to not only Buy from brands. but also to take the data to brands and to co-manufacture new collections together. That's right. The data they've collected

Led them to partnering with designers on original collections. Take the case of Jason Wu A young designer who rocketed to fame as one of Michelle Obama's favorite designers. Michelle even wore a Jason Woo dress, to the presidential farewell address.

Through data insights. Rent and runway had clocked that their customers were very interested in his brand. But they'd also clocked. That the styles he created. Didn't exactly match up.

With their customers' needs. Jen's teams took these insights to woo. And it led to the creation of a new line. Initially called the Jason Wu Gray.

Which proved a huge success. That's the power of the data. powering the business behind the business. It's built relationships. With customers and

With brands. That's also not the end of the story. It was data insights. that led Rent the Runway. To add an unlimited subscription service to their offerings.

A service that has overtaken their a la carte model in popularity. Especially among professional women. who want a constantly refreshing living closet. Not just for weddings and parties. But for every day.

We understand a huge amount about our customers because our customers are telling us not only about their style or their fit preferences, but they're telling us about their lives. They're telling us. That they're pregnant before they tell anyone else in their life. They're telling us that they have a business meeting this week or they're going to Miami next weekend. So we understand a whole lot about The users

and a lot about the inventory and were able to kind of match those two data sets together. As the company grows, they had a one billion dollar valuation this past March. Jen and her team will be keeping a close eye on On both their client facing And

Behind the scenes businesses. To make sure they are supporting each other mutually. It becomes obvious. Immediately.

For example This fall. when implementing a new software and racking system in rent the runway's warehouses Significant issues resulted in weeks of order cancellations. and service disruptions that made headlines.

Gen New That trust with our customers is vital. So she issued customer refunds as well as two hundred dollars in cash. They're accepting. New subscribers again.

But it was a sobering reminder. That if your behind the scenes businesses Run on carefully calibrated systems. You're consumer facing business. Runs on trust.

Well and part of how you build trust is Consistency over time. Exactly. No one trusts from the very beginning. You have to show through your actions.

In a way. The business behind your business. is most effective when it's invisible to the consumer. If it's working perfectly, they don't even know it's there. Think of your smartphone.

It looks like one compact piece of technology. With some ability to apps. Make phone calls, do messages. And yet within that is a whole computer of chipsets. modems to talk to your cell network.

Operating system platforms. in order to build applications on top of. Complex governance. over the application ecosystem And security measures.

Yet. You can still Make a call. Answer a call? Text people.

All that complexity. Within a simple Container I'm Reed Hoffman. Thanks for listening.

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