Jennifer Hyman on Building Rent the Runway and Managing for the Long Term

Jennifer Hyman tells Harry Stebbings that Rent the Runway began with her sister going into credit-card debt for a dress she expected to wear once. Hyman imagined an alternative: access to a changing wardrobe without owning each item forever. The early target customers understood the need, she says, while some designers and investors took longer to understand it.

Hyman compares fast fashion to a form of short-term use: inexpensive clothes may be worn only a few times before being set aside. She describes rental as a way to give customers access to aspirational brands and claims financial and environmental advantages. Those advantages depend on the actual behavior and lifecycle of garments; the interview does not quantify them.

Looking back at starting at 27, she says an idea matters less than execution and directing people and resources toward durable advantages. COVID was a formative leadership test: Rent the Runway lost substantial revenue and had to reinvent parts of the business. She credits employees who remained committed to the mission.

Hyman looks for resilience and comfort with change when hiring. She tells candidates that their role may look very different in six months and says she asks about their lives as well as careers. Her interview style is a personal approach to assessing fit, not proof that family background predicts performance.

Stebbings worries that employees stop working at 6 p.m. when he continues late into the night. Hyman argues that people need full lives to sustain intense work and avoid burnout. She says she sometimes sends emails late, but does not expect an immediate response; she wants employees to grow over many years.

She acknowledges making hiring mistakes despite investing time in interviews. Sometimes an employee and company simply do not fit, which need not mean either is bad. She prefers addressing concerns a few months into a role instead of waiting one or two years, and recommends hiring deliberately, with more scrutiny for senior roles.

Hyman says she wishes she had managed the private company more like a public one. Raising private capital encouraged her to emphasize how different Rent the Runway was; public-market comparisons forced her to examine both advantages and weaknesses against apparel companies. She now sees such comparison as useful even for an unusual model.

She estimates inventory cost at about 30% of revenue, compared with 50% to 55% at many apparel retailers, because garments can be rented repeatedly. These are her stated comparisons and periods are not fully specified in the conversation. A product-cost difference alone is not the same as net profit.

Comparing businesses at roughly $300 million of revenue, she says Rent the Runway’s selling, general and administrative expenses were too high for its scale. She points to restructuring and a financial transformation, citing gross margin of about 30% in the fourth quarter of 2021 and 44% in the fourth quarter of 2022. Those are her figures for particular quarters, not annual margins.

Stebbings asks whether earlier expenses were necessary to reach scale. Hyman says substantial capital was needed for distribution, inventory and a reverse-logistics system to inspect, clean, repair and ship individual garments, sometimes with a zero- or one-day turnaround. Inventory is paid for before rental revenue is earned, creating a working-capital need.

She says the 44% fourth-quarter gross margin includes inventory and fulfillment, including shipping and garment restoration, and compares it favorably with other retailers. She argues that lower overhead and more revenue scale could make the business profitable. The comparison and profitability outlook are the CEO’s claims, not proof of achieved net profitability.

Asked why Wall Street was not more enthusiastic, Hyman says the business had been unprofitable and had burned cash, and investors questioned market size and whether it could make money. She considers margin progress and competing subscription services evidence of potential demand. Her interpretation does not establish future profitability or subscriber growth.

She says she wants long-term investors and a company that can last decades, not profitability merely to satisfy a quarterly fashion. She believes clothing subscriptions can become a larger part of wardrobes and describes a more diverse customer base. Those are company observations and a founder’s long-term thesis.

Hyman predicts AI will transform how businesses operate and sees fashion discovery as an opportunity for Rent the Runway. She says the company already used machine learning in personalization and operations, and hopes conversational tools can make shopping easier. These are forecasts and a company strategy, not demonstrated financial results or a guarantee that the business faces no disruption.

After years emphasizing its technological and logistical identity, she says Rent the Runway is ultimately a fashion company from the customer’s perspective, enabled by technology. She considers the investment in engineers, data science and operations part of the cost of building the service.

Hyman says some designers initially resisted rental because they feared it would replace purchases. She now portrays the service as a way to introduce younger customers to designer brands. She estimates that an average subscriber spends about $2,000 a year and says 98% of customers report renting brands they had not previously owned; these are company claims.

She compares receiving and wearing rental garments to trying clothes in a changing room, except customers can experience them in daily life. She argues this can promote later purchases for designers. Her claim about the size of that effect and the brands’ marketing benefits is not independently established in the interview.

Hyman claims all brands that had worked with Rent the Runway continued to do so and presents that as evidence of strong partnerships. She also argues that fast fashion has hurt designers by offering inexpensive alternatives. Her retention and market-share statistics are company or speaker claims with no independent verification here.

Hyman criticizes what she calls growth hacking: small interface experiments can move metrics without fundamentally improving a young company’s product or customer relationship. She thinks tactics that were useful at a large platform were too readily applied to startups. This is her assessment, not a finding that all experimentation is ineffective.

She also argues that startups and investors overallocated resources to paid search and social advertising on the assumption that a favorable lifetime-value-to-acquisition-cost ratio could be scaled indefinitely. In her view, ads can attract a quick conversion without necessarily building loyalty, product quality or brand. She includes her own company among those that made allocation mistakes.

Hyman praises Amazon’s customer experience and Airbnb’s brand and product investment. She says more than 80% of Rent the Runway customers had come organically and paid marketing was less than 10% of revenue. These are her historical company figures and descriptions of other businesses, not independently audited evidence in this conversation.

Stebbings disagrees that paid marketing is inherently poor: it can help customers discover products they later love. Hyman clarifies that her objection is excessive allocation to bottom-of-funnel ads at the expense of brand and customer experience. The two distinguish customer acquisition from the work needed to retain customers.

They also distinguish growth work that removes user friction from “growth hacking” focused on tiny interface changes. Hyman believes retention for Rent the Runway depends on customers finding more use and enjoyment in the clothes and receiving them conveniently. Her view reflects the needs of her own business.

Asked whether consumer subscriptions can sustain venture-scale businesses, Hyman resists grouping all subscription models together. She cites Rent the Runway’s 44% gross margin and fulfillment expenses of about 30% of revenue, including shipping and garment care, as evidence of potential. Gross margin is not net income, and her statement that margin can only rise is a prediction, not a certainty.

She contrasts a rotating shared wardrobe with subscriptions that send more physical goods each month. Her view is that customers want variety and expression without accumulating every garment. Her estimate of average annual apparel purchases and proposed wardrobe split are her own claims and vision, not verified universal behavior.

Hyman says the proof of the model will be financial performance and expresses determination to make the business generate cash. That is a founder’s goal and commercial interest, not a statement that it had already achieved the outcome. She argues that market momentum and recent changes make the opportunity large.

As a CEO, Hyman says she sets vision, strategy, team and resource allocation. As a board member, she thinks her role is to ask questions, challenge assumptions and contribute experience rather than write management’s strategy. She serves on the boards of Estée Lauder and Zalando, according to the episode description.

She praises Estée Lauder CEO Fabrizio Freda and the Lauder family’s long-term stewardship, particularly Leonard Lauder’s continuing curiosity. Sitting on the board has encouraged her to think more long term. These are her personal assessments of people with whom she has a governance relationship.

Hyman says she adopted what she calls strengths-based leadership from Freda: identify what someone does exceptionally well and build around it. She prefers investing in strengths to concentrating on moderate improvements in weaknesses. This is a leadership philosophy rather than a universal rule for all roles.

She recounts meeting Beyoncé through a friendship with her manager and collaborating on a Rent the Runway promotion. Hyman says the exposure brought traffic and a sales bump but regrets not building more from the opportunity. The effect is her retrospective account, without a quantified attribution.

In the quick-fire round she says work-life balance is possible, emphasizes maintaining forward momentum and describes AI as a potentially transformative innovation. She recalls the shock of revenue collapsing during COVID and the company’s IPO roughly 18 months later. Her compressed account is not a complete financial history.

Looking to 2028 from 2023, Hyman hopes for a much larger, profitable company and potentially millions of subscribers. She sees growth in the existing rental model rather than requiring a completely new business. These are aspirations and predictions, not achieved results; Stebbings closes by thanking her.