Rent the Runway
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Rent the Runway’s first iOS team launches Runway, an easier way to coordinate app releases
A team of mobile app engineers and designers from companies like Rent the Runway, ClassPass, Kickstarter and others, are now launching their own startup, Runway, to address the common pain points they experienced around the mobile app release cycle. With Runway, teams can connect their existing tools to keep track of the progress of an app’s release, automate many of the manual steps along the way and better facilitate communication among all those involved.
“Mobile app releases are exercises in herding cats, we often say. There’s a lot of moving pieces and a lot of fragmentation across tools,” explains Runway co-founder Gabriel Savit, who met his fellow co-founders — Isabel Barrera, David Filion, and Matt Varghese — when they all worked together as the first mobile app team at Rent the Runway.
“The result is a lot of overhead in terms of time spent and wasted, a lot of back and forth on Slack to make sure things are ready to ship,” he says.
Typically, interdisciplinary teams involving engineers, product, marketing, design, QA and more, will keep each other updated on the app’s progress using things like spreadsheets and other shared documents, in addition to Slack.
Meanwhile, the actual work taking place to prepare for the release is being managed with a variety of separate tools, like GitHub, JIRA, Trello, Bitrise, CircleCI and others.
Image Credits: Runway
Runway is designed to work as an integration layer across all the team’s tools. Using a simple OAuth authentication flow, the team connects whichever tools they use with Runway, then configure a few settings that allow Runway to understand their unique workflow — like what their branching strategy is, how they create release branches, how they tag releases and so on.
In other words, teams train Runway to understand how they operate — they don’t have to change their own processes or behavior to accommodate Runway.
Once set up, Runway reads the information from the various integration points, interprets it and takes action. Everyone on the team is able to log into Runway via its web interface and see exactly where they are in the release cycle and what still needs to be done.
“We’re forming this glue, this connective tissue between all of the moving pieces and the tools, and creating a true source of truth that everybody can refer to and sync or gather around. That really facilitates and improves the level of collaboration and getting people on the same page,” Savit says.
Image Credits: Runway
As the work continues, Runway helps to identify problems, like missing JIRA tags, for example. It then automatically backfills those tags. It can also help prevent other mistakes, like when the incorrect build is being selected for submission.
Another automation involves Slack communication. Because Runway understands who’s responsible for what, it can direct Slack notifications and updates to specific members of the team. This reduces the noise in the Slack channel and ensures that everyone knows what they’re meant to be working on.
Currently, Runway is focused on all the parts of the mobile app release cycle from kickoff to submission to the actual app store releases. On its near-term roadmap, it plans to expand its integrations to include connections to things like bug reporting and beta testing platforms. Longer term, the company wants to expand its workflow to include launching apps on other platforms, like desktop.
Image Credits: Runway
The startup is currently in pilot testing with a few early customers, including ClassPass, Kickstarter, Capsule and a few others. These customers, though not all yet paying clients, have already used the system in production for over 40 app release cycles.
The startup’s pricing will begin at $400 per app per month, which allows for unlimited release managers and unlimited apps, access to all integrations, and iOS and Android support, among other things. Custom pricing will be offered to those who want higher levels of customer support and consulting services.
The startup doesn’t have an exact ETA to when it will launch publicly as it’s working to onboard each customer and work closely with them to address their specific integration needs for now. Today, Runway supports integrations with the App Store, Google Play, GitHub, JIRA, Slack, Circle, fastlane, GitLab, Bitrise, Linear, Jenkins and others, but may add more integrations as customers require.
Runway’s team of four is mostly New York-based and is currently participating in Y Combinator’s Winter 2021 virtual program. The company hasn’t yet raised a seed round.
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Extra Crunch Live: Join Anu Duggal for a live Q&A on August 20 at 11am PT/2pm ET
Rent the Runway and Glossier became unicorns within the same week in June 2019. That same year, only 2.7% of venture capital dollars went toward female-founded companies.
Silicon Valley’s disconnect between the monetary success of female-founded companies and funding them in the first place is disheartening. The conversation is there, but the dollar sign momentum remains missing.
Anu Duggal founded the Female Founders Fund before both were even a tangible reality. In 2014, the entrepreneur launched her first fund to invest in female-led startups. It took her 700 meetings over two years to make that first close, she said. Years later, venture capital has slightly taken note. But the Female Founders Fund, or “F Cubed,” has tracked female-led wins and bet big on the underestimated asset class.
Her early focus on female founders hasn’t evolved, but the landscape has. And in an unprecedented world of remote deals and democratization of venture capital, we’re even more excited to have Duggal join us on Extra Crunch Live this upcoming Thursday at 11 a.m. PT/2 p.m. EST/6 p.m. GMT
Those tuning in and taking notes are encouraged to ask questions, but you have to be an Extra Crunch member to access the chat. If you still haven’t signed up, now’s your chance! With the subscription, you’ll also be able to check out all of our stellar previous guests on-demand (watch those episodes here).
Female Founders Fund has provided seed institutional capital to entrepreneurs with over $3 billion in enterprise value. The firm has cut checks into women-led companies such as Rent the Runway, Billie, Tala, Peanut, Thrive Global and Zola. The fund has also attracted limited partners like Melinda Gates and Girls Who Code founder Reshma Saujani.
Duggal herself has a fascinating trajectory into technology investing. At 25, she started a wine bar in Bombay called The Tasting Room. She went on to get an MBA from London Business School, and co-founded Exclusively.in, an e-commerce company that got acquired by Indian fashion e-commerce company Myntra in 2011.
Hear from Duggal on August 20 about how the investment landscape has changed for female founders, what she thinks of as a success story and if 2020 feels different than 2014. And Extra Crunch fam, make sure to bring your thoughtful questions for me to ask her live on air.
You can find the full details of the conversation below the jump.
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The story behind Rent the Runway’s first check
When Rent the Runway co-founders Jennifer Fleiss and Jennifer Hyman got their first term sheet, it had an exploding clause in it: If they didn’t sign the offer in 24 hours, they would lose the deal.
The co-founders, then students at Harvard Business School, were ready to commit, but their lawyer advised them to pause and attend the meetings they had previously set up with other investors.
Twelve years later, Rent the Runway has raised $380 million in venture capital equity funding from top investors like Alibaba’s Jack Ma, Temasek, Fidelity, Highland Capital Partners and T. Rowe Capital. Fleiss gave up an operational role in the company to a board seat in 2017, as the company reportedly was eyeing an IPO.
But the shoe didn’t always fit: Earlier this year, Rent the Runway struggled with supply chain issues that left customers disgruntled. Then, the pandemic threatened the market of luxury wear more broadly: Who needs a ball gown while Zooming from home? In early March, the business went through a restructuring, furloughing and laying off nearly half of its workforce, including every retail employee at its physical locations.
In 2009, Fleiss and Hyman were successful Harvard Business School students. Hyman’s college roommate knew a prominent lawyer who agreed to advise them on a contingency basis in exchange for connecting them with potential investors.
Still, fundraising “was extremely hard,” Hyman said. “We were in the middle of a recession and we were two young women at business school who had never really done anything before.”
Fleiss said venture capital firms often sent junior associates, receptionists and assistants to take the meeting instead of dispatching a full-time partner. “It was clear they weren’t taking us very seriously,” Fleiss said, recounting that on one occasion, a male investor called his wife and daughter on speaker to vet their thoughts.
In an attempt to test their thesis that women would pay to rent (and return) luxury clothing, Fleiss and Hyman started doing trunk pop-up shows with 100 dresses. On one occasion, they rented out a Harvard undergraduate dorm room common hall and invited sororities, student activity organizations and a handful of investors.
Only one person showed up, said Fleiss: A guy “who was 30 years older than anyone else in the room.”
Old-fashioned meets nontraditional
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Stanford students are short-circuiting VC firms by investing in their peers
Stanford’s success in spinning out startup founders is a well-known adage in Silicon Valley, with alumni founding companies like Google, Cisco, LinkedIn, YouTube, Snapchat, Instagram and, yes, even TechCrunch. And venture capitalists routinely back more founders coming out of the Stanford business program than any other university in the country.
One group of Stanford graduate students is well-aware of their favorable odds, and think that they should be able to cash in their classmates, too — not just accredited investors and the super-wealthy.
They have put together Stanford 2020, a new fund created entirely by Stanford classmates to invest in their fellow students’ ventures.
The idea was spurred by six students, who after a year of working with Fenwick & West law firm to find a suitable legal structure landed on creating an investment club — multiple parties can invest together as long as they have some form of shared ties.
Steph Mui, a founding member of Stanford 2020 and former venture capital associate at VC firm NEA, formed the club in defiance of the inaccessibility of angel investing, which she described as an elite Silicon Valley status symbol.
“Especially in Silicon Valley where it seems kind of a status symbol and only accredited people can do it, it feels very elite” she said. “We started thinking more about if we can actually make this something that the whole class could participate in, or at least make it more accessible to more than just like these small pockets of people that do it behind closed doors.”
Stanford 2020 club members must put up a minimum of $3,000 to join the investment club, and any eventual returns will be distributed proportionally to the investment each makes. So far, Mui tells TechCrunch that $1.5 million has been raised across 175 investors, with 50 investors willing to give $500,000 on the waitlist. In fact, the club is so “oversubscribed” that it is working to give money back.
Mui estimates that roughly 40% of the class is participating in the club. The founding members are being defined as “board members” who were recruited for passion and for diversity in background, professional interests and past leadership experience.
The group plans to invest $50,000 to $100,000 in startups depending on round size and valuation.
Mui thinks that Stanford 2020’s competitive advantage is largely the personal relationship it has with the companies it will invest in. After all, success might be just an arm’s reach away. Indeed, Cloudflare, Rent the Runway and ThredUp were all born in the same HBS classroom after being assigned a class project, according to Cloudflare CEO Matthew Prince.
“We have such strong pre-existing relationships, we know what people are working on way before they even raise,” Mui said.
Anyone who has been part of a club or team knows that loyalty runs deep, but we’ll see if that closeness is enough for a founder to dole out a stake in their company. While Stanford 2020 doesn’t take any management fee or carry, equity isn’t casual; in that vein, a famed Silicon Valley firm might be of better utility than your classmates.
Stanford 2020’s set up sounds similar to StartX, the university’s attempt at investing in its own, leafy backyard, which shut down in 2019. Launched in 2013, StartX offered to invest money in exchange for equity in any startup that went through its auxiliary accelerator and has $500,000 from professional investors.
Looking at Stanford 2020’s set up, the rules are almost exactly the same. Mui tells TechCrunch that startups must fulfill two criteria in order to automatically invest: first, the co-founder must be a member of the class, and second, they must raise a round of $750,000 or more from a reputable institutional investor. They define reputable as a list of 80 investors they got guidance on from advisors in the industry.
The concept of a rule-based automatic investment strategy comes with a big red flag: what if the founder has a bad idea or is a bad person, and still meets the criteria?
“I actually literally can’t think of a single person and I’m like, that person is so bad or so immoral, that we wouldn’t invest in them,” Mui said. “That’s part of the benefit of investing only in your classmates.”
But in case a Stanford-born class does have a problematic founder, Stanford 2020 has a veto voting mechanism.
In the grand scheme of things, Stanford-born startups are in a better spot than most when it comes to securing cash. They don’t desperately need another fund to invest in them. Mui’s ambition for Stanford 2020 is that other schools can copy and paste the legal structure they took a year (and a lot of hard work) to figure out.
She says they’re already getting inbound from incoming Stanford classes, other Stanford Schools and undergraduates. Now that it’s closed, she hopes they hear from other business schools, too.
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Rent the Runway just opened its largest brick-and-mortar store yet
Who would have thought Rent the Runway would emerge as a competitor to The Wing and all traditional brick-and-mortar retail?
Its newest store, complete with co-working space, shows it’s more than just a designer gown rental service. Shortly after landing a $125 million investment at a $1 billion valuation, Rent the Runway (RTR) has replanted roots in San Francisco, opening an 8,300 square foot West Coast flagship in the city’s Union Square neighborhood.
Located on 228 Grant Avenue, the store is RTR’s fifth and largest location yet. In addition to 3,000 pieces of merchandise curated daily, the store includes stylists, a coffee cart, space for evening programming and networking events, desk space for co-working, a beauty bar and some 20 dressing rooms.
“Think of it like your gym or your Starbucks; it’s part of what you do on a daily basis,” RTR chief operating officer Maureen Sullivan told TechCrunch.
RTR was founded in 2009 by Jenn Hyman and Jenny Fleiss as a website for renting expensive, designer dresses. Since then it’s expanded to become a fashion rental marketplace equipped with accessories, casual pieces and its bread and butter: formal wear.
The company’s core product, RTR Reserve, lets customers rent one piece of clothing for four to eight days with prices starting at $30 per garment. RTR Update, at $89 per month, gives customers access to up to four pieces of clothing per month. And finally, RTR Unlimited charges users $159 for unlimited swaps every month, meaning you get up to four pieces at a time but can visit a store daily and swap the pieces out, if you wanted.
Its new space is essentially The Wing with an enormous closet of designer clothing available to rent. RTR even used the same all-female design team that crafted The Wing’s spaces to create its newest spot, which mimics The Wing’s airy, West Elm-like vibe.
Of course, RTR isn’t trying to compete with co-working spaces or salons or coffee shops; rather, the team recognizes that sometimes women need to find beautiful clothes and get shit done simultaneously.
“Our subscriber is a busy working woman,” Sullivan said. “Sometimes she may want to come in and work.”
The new store was built for the 21st century tech-enabled consumer. A “physical manifestation of the shared closet,” the store’s technology allows customers to return rented items within a few seconds, check out with their RTR Pass on their phone and pick up orders without having to wait in line.
RTR currently operates physical stores in Chicago, New York, Woodland Hills, Calif. and Washington, DC. Sullivan says San Francisco is the company’s third largest market behind New York and DC.
RTR opened its first standalone location in San Francisco last year and quickly realized the space was too small for its expanding crowd of subscribers. While the service was intended to be all-digital, data collected by RTR indicated users wanted to try on clothes before they rented. With that in mind, RTR will continue to open additional stores and “experiment with its physical presence” in other ways, too.
“Data is at the heart of our company,” Sullivan said. “We aren’t a typical direct-to-consumer brand.”
RTR has raised a total of $521 million in debt and equity funding from Franklin Templeton Investments, T. Rowe Price, Female Founders Fund and others.
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Rent the Runway opens physical store in San Francisco
Rent the Runway, the fashion startup that began as a rental service for special occasions and has since evolved into a service for people also looking to spice up their everyday wear, just opened up its fifth physical, standalone location. The new location, in downtown San Francisco, enables Rent the Runway members to try on clothes, rent and return them.
Rent the Runway’s launch of a standalone brick-and-mortar location in San Francisco comes after it first opened up a location inside Neiman Marcus. With a standalone location, the company is able to offer longer hours for its members. Instead of opening at 10 a.m. and closing at 7 p.m., Rent the Runway can now stay open from 9 a.m. – 8 p.m. Monday through Friday. It also, of course, has weekend hours.
Thanks to some technology Rent the Runway developed within the last year, it has essentially “legalized shoplifting” for its members, Rent the Runway COO Maureen Sullivan told me yesterday ahead of the store’s launch. Toward the front of the store, there’s a self-return process that enables anyone to quickly return their items. A little farther back in the store, there’s a handful of self-checkout kiosks that let members quickly scan their items and leave.
Photo by Miha Matei Photography
Since its launch about nine years ago, Rent the Runway has launched two additional product offerings. In addition to its standard Reserve product, a one-time rental, Rent the Runway now offers two subscription products. The first is called Unlimited, which lets members rent four items at a time on a constant rotation (meaning you can swap them out as much as you want) for $159 a month.
The second is called Update, which lets you rent just four items for the whole month for $89 per month. In the event someone really likes what they’ve rented, they always have the option to purchase the item at anywhere from 10 percent to 75 percent off. Today, the subscription products make up 50 percent of Rent the Runway’s revenue, with San Francisco as the third largest subscription market.
Photo by Miha Matei Photography
In the nine years or so Rent the Runway has been around, a number of other services have cropped up around fashion. Stitch Fix, which went public last November, and Trunk Club by Nordstrom are two of the big ones. But what differentiates Rent the Runway from the likes of Stitch Fix is that, “they’re trying to get you to buy stuff,” Sullivan said. “You’re still buying things that accumulate in your closet.”
The vision with Rent the runway is to get to the point where 50 percent of your closet is rented, and therefore less cluttered. Rent the Runway, for example, has some customers who wear rented clothes 120 days out of the year.
Rent the Runway currently partners with over 500 brands, and operates as a new type of distribution channel for them. What Rent the Runway offers for brands is marketing and discovery, and customer data.
Down the road, Rent the Runway does envision getting into men’s clothing Sullivan said, but right now, there’s “unprecedented growth” in women’s clothing, so that’s where the focus will be for now.
Back in August, Rent the Runway partnered with Temasek for a $200 million credit facility. Before that deal, Rent the Runway had raised more than $200 million from traditional investors like KPCBC, Highland Capital, Bain Capital, TCV and others.
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Rent the Runway inks $200 million credit facility with Temasek
Rent the Runway today announced that it has partnered with Temasek for a $200 million credit facility.
Founded in 2009, Rent the Runway lets users rent items of clothing for special events or occasions, bringing runway styles to folks without the cash to purchase the clothing outright.
Rent the Runway started out by letting users rent their wares for about 10 percent of the item’s price. But in 2017, RTR introduced a subscription model, giving users unlimited rentals for $89/month.
The model has already been proven by other businesses. RTR started giving users access to fashion in the same way that Netflix gives users access to video, Spotify gives access to music, or even the way ClassPass gives users access to studio fitness classes.
Since the subscription launch, RTR’s subscription business is up 150 percent year over year, and represents 50 percent of the company’s overall revenue.
According to the release, RTR will use the new funds to continue growing its subscription business, expand operations, and refinance its existing debt facility. As part of the deal, Temasek has received an observer seat on the board of directors.
In response to the question around why Rent The Runway chose a credit facility over traditional VC investment, CFO Scarlett O’Sullivan had this to say via email:
We are very pleased that the company has demonstrated the kind of business model, growth prospects and financial discipline that make it possible to access a credit facility of this size with an equity-minded long-term partner like Temasek – they have a proven track record of supporting disruptive high-growth companies.
We were specifically looking for debt for three key reasons:
1 – This facility gives us the ability to access more financing – we can draw capital as we need to, giving us flexibility to grow our subscription business more quickly
2 – We improved the terms of our prior facility which we refinanced with a portion of these funds — and debt for us is a lower cost option to finance the business
3 – It is less dilutive to our existing shareholders – we believe there will be significant value creation over the next several years as we continue to change consume behavior and help women put their closet in the cloud
Before this latest deal, Rent the Runway had raised more than $200 million in funding from investors such as Bain Capital, KPCB, Highland Capital, TCV, and more.
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Amazon eyed up Everlane, Le Tote and more for acquisition in a wider fashion push
Amazon has been focusing attention on areas like media streaming, its faster delivery and pickup services, hardware and enterprise via AWS. But it’s also making an effort to reboot one of the more legacy parts of its business: fashion. TechCrunch has learned from multiple sources that the e-commerce giant has eyed up several startups in the fashion sphere as potential acquisitions… Read More
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