Jennifer Fleiss (Rent the Runway) and Scott Friend (Bain Capital Ventures)

Scott Friend, Bain Capital Ventures:

• HBS alum, ProfitLogic founder
• Investment focus: Transformation of retail industry
• Early investor in RTR

Jennifer Fleiss, Rent the Runway:

• HBS alum, Rent the Runway co-founder

Founding Rent the Runway

• Jenny and Jenn had the idea while @ HBS; Now >300 employees, 250+ brands

The consumer dilemma: “A closet full of clothes, but nothing to wear”

• Other factors at the time: Social pressure with new social media trends + Fast fashion
• Started with trunk shows at Harvard and Yale sororities to prove the model worked and women had demand for it
• Designers had limited control over the pricing @ retailer, but their brand value is at stake

Early discovery: “Women have a transformative emotional connection with fashion”

Getting Funding

• Needed to invest early in a large number of dresses to test the model well; the RTR brand needed to feel aspirational, high-end
• Initial introduction to Scott @ Bain Capital Ventures
• What made them different: Highly professional, structured, thoughtful about what they were going to build and why
• What made the timing and execution different: There were tons of entrepreneurs founding ecomm businesses in 2009,but Jenny and Jennifer already had a proof of concept in their MVP
• What made Scott different for Jenny and Jennifer: Former entrepreneur who understood the challenges of running a business

Executing the Model: Jennifer's Perspective

• Priority: Get the site up in order to test the revenue model (HAD to be up by Holiday 2009, which was the peak of the season)

The first challenge: “How, as two non-technical people, can we get a website launched within 2 months? It was the first, most difficult component”

• To accomplish that, unsuccessfully searched for a CTO, then outsourced
• Started with an outsourced option, “which was our only choice at that point” -- the first one was a scam, and the second was ultimately successful

The second challenge: “The other piece was getting designed brands signed on… which is not a given when you're asking them to risk their brand equity.”

Executing the Model: Scott's Perspective

“Our thought was: let’s do as little as we can do on the technology side and just spend our time proving that the revenue model works. By 2009 New Years, we had 100% of our inventory sold out, and... we’d done our first-year revenue plan within 1 month"

• It felt and looked like a fashion company at the time, which made finding a technical CTO challenging because it didn’t look like the analytics and operations company that they were seeking -- even though it is now
• “Technology didn’t exist to run our reverse logistics process, which meant we would need to spend a lot of time and money buying something and customizing it, or building it ourselves.” (but tough to replicate)

The good news: “A big part of the bet was the assumption that if it worked, it would be really hard to replicate, both operationally and in terms of designer brands”

• Skepticism of the brands was challenging: “It tests how thick your skin is. You’ll get doors in your face, hear 'No' all the time”
• “We listened to what was good for the designer, what customers wanted, and we evolved the story as a result. We knew we just needed to get women renting dresses.”

The Future of Rent the Runway

“Our guiding light is always listening to customers. No matter what we’ve done… it’s always stemmed from what customer want.”

• Now a major focus is on the variables you can use to drive the average order price and conversion rates

• Scott's thoughts on their success: 
• “Jenn and Jenny were really thoughtful about the best things to do on the back end of the business at all times.
• “Almost every dress goes out the door on Thursday and comes back on Tuesday. From Tuesday to Thursday, somehow those dresses have to be evaluated, processed, cleaned, fixed, picked again, packed, and shipped. We are the largest dry cleaner in the world”
• “The other piece they were brilliant about was recognizing that we would have more data about customers than any retailer in the world. We’d know their size, style preferences, even their event calendar. But collecting that data and doing something with it was challenging -- How many fashion companies do you know that had one of their first hires as a Data Scientist?” 
• "Great entrepreneurs can get great hires and just get people to do stuff for them. The number of people who have offered advice or guidance over the years is a credit to Jenn and Jenny spending time on that." 
• They a great wealth of resources available at HBS; they got introductions to people outside the network, and also met with 80+ professors

Q&A
Question: What is the exit strategy? 

• It's always been about growing the business and keeping up with demand, but "things have finally settled; there aren't as many fire drills and the company is doing really well. We have time to think about where to head from here"
• "All the options for exit will remain open as long as we continue to build and grow"
• Scott: Sharing economy is becoming more the norm -- it's the tip of the iceberg in a way that it's proving to women that this is a good way to test luxury; 500K customers today is still <1% of the target market
• Scott: The name, the story, and the founders are incredibly compelling -- you can see then standing up in front of public markets and have that story resonate. 
• Scott: Profit per dress is very attractive and more so as you grow; this could be a standalone public company. 

Question: Scott, what have you invested in that has failed and why? 

• Even in cases where the business didn't work, the team was so attractive that they still got hired and acquired (Example: celebrity support for an app that was a "next-generation mobile Yelp") --  Just the nature of early stage venture investing 

"I have no idea why this particular company wasn't Instagram. The team was great, and Yahoo bought the company because they loved the team." 

Question: How will the "Internet of things" (e.g., iBeacon tech) impact the retail industry?

• Being an online first company gives you an immediate advantage because you have so much data on your customer -- Beacon is just one tech that allows you to further personalize your relationship with customers 

"Our shopping experiences are going to become way more uber-like over time -- retail is in a position to provide a similarly frictionless experience" 

Question: When will RTR pursue international expansion?

"There will always be shiny new things you could work on, and international is one of them at this point for us; having an investor, board, and team that keep you focused is helpful" 

• The other thing that makes international less attractive in the short term is how challenging the business itself is -- it would take years to get it right, and so many companies that have started replicas of RTR internationally have had trouble being successful

Closing Keynote: Rich Miner, Partner at Google Ventures, Co-Founder of Android

"Exciting industries: innovation around enterprise, especially mobile's impact on enterprise."

"Traditional enterprise communication models are not creative... Think about what you can do with a mobile device."

"There is also tremendous amount of innovation in connected devices: your car, your phone, your digital camera..."

"It's been easier to prototype hardware now with the makers' movement: 3-D printing, makers' network. You can get your design built and delivered back to you in a few weeks."

"The idea of bringing the world to you with a press of a button."

"There is raw data saying that teams that worked together before will be more likely to succeed than teams that haven't. Teams with co-founders do better than those who don't."

"It comes down to the right dynamics between the founders. But also know what's the product, what's the market."

"Diversity in teams is hugely important."

"Successful startups tend to have a balance and diversity of background in business, technical, commercial experiences, with the exception if the team has worked together before."

"A lot of it is being ready for the ups and downs, the successes and the failures."

"To future entrepreneurs: you should be driven, you want to take risks. If you hesitate to clip the bungee cord on... The best entrepreneurs have a problem they want to solve. You can't get there by matricing where you can get most money."

"Working for a big company like Google sometimes is good to get exposed to skills that may help you learn product development etc in the future. Or find a startup you like and join them. You don't have to dive in right at the beginning."

Enterprise Mobility: How Mobile is Transforming the Workplace

Live-Blog of Enterprise Mobility Panel.  *Please note that anything not "in quotes" are paraphrases of what was said and are not direct quotes of the panelists.*

Moderator: Michael Skok, North Bridge Venture Partners (http://mjskok.com/)

Panelists: 
Jay Wessland, Vice President of Technology, Boston Celtics (Apperian customer)
Cimarron Buser, Global Business Development, Apperian
Tom Lounibos, CEO for SOASTA
Tim Gu, product Manager, Integrations, Okta

Tom: Enterprises don't have talent pool to build and support mobile applications.  In crisis mode.  Start with sales reps
Uneven distribution in how enterprise shops are going into mobile. Majority is being used as sales tools (catalogs, finding stores)

Michael:  this is a consumer-led evolution.  Moving forward, it will be "BYO Cloud," "BYO Device," and different security measures will be needed for corporate and private data.

Tim: this breaks traditional security model (company devices, company resources).  Now people are bringing their own devices to work.  How do we manage security?

Cimarron: Apperian is unique in that it allows companies to deploy an internal app store. People expect apps to be great, but traditionally enterprise apps have "sucked."  People come into workplace expecting great apps in a great app ecosystem.  Many of these apps have a social complement.  Becomes incumbent on the company to have a system to deploy apps and ensure adoption since ROI depends on it.

Michael: Jay, you're an Apperian customer. Comment on how you reacted to the "your apps suck" mentality.

Jay: moved videos and information onto general, publicly-accessible cloud offerings, but didn't want to go quite so public with enterprise apps.  Went to Apperian and tied apps to enterprise.  Separated information into security-required and not.  This separated user bases and data within company.  Corporate employees needed security and were willing to invest time in learning apps.  Players have less need for this.

Tom: quoted Jack Dorsey: "In the future enterprise apps have to be as easy to use as Twitter."  I laughed at first but every day since that comment I realized he's right.  Everything now is about seamless application to prevent fragmentation.  All of our customers, enterprise or consumer, are trying to make apps as simple to use as possible.  How are they doing this? Looking at design. Simplifying and paying attention to "where the button is."

Cimarron: Consumerization of IT:  Expectation that apps used in enterprise are as simple to use as consumer apps.  Example of app used in insurance: reporting accidents via app works for end users, but can be mirrored for insurance adjusters.

There are so many things where mobile is the only way: "people won't want some stuff displayed openly on computers."  True for Celtics too: laptops no longer fit space, so people moving work to phones and ipads.

Mobile is now about content creation as much as it is about consumption.

Moving on to questions from Pigeonhole:

Corporate communications: Jay addressed early use of Blackberry Messenger as quick connections.

Tim Gu: brought up own question to audience about move to video communication for work.  Would people be willing to use this if the are home and disheveled?

Q: How are stadiums using technology to avoid mobile service disruptions caused by extremely high levels of demand concentrated in small areas?

Jay: "Not very well."  Mobile is such a challenge:  you have to rely on connectivity.  Industry is still in infancy.  Infrastructure problems, etc.  This opens up a huge opportunity for us.

Q: Will non-cloud-based enterprise software disappear?

Tom: What drove the cloud? Cloud computing came from the requirement of mobile devices.  We will continue to run into problems but we will also innovate solutions.

Michael: Mobile access to searches has surpassed PCs.  This will continue to grow. All of this relies on mobile connectivity.

Jay: Dropbox offers a simple cloud solution to this: it is so easy to favorite documents to make them available offline.  Other apps can do this too.

Enterprise selling.  What is the best strategy? Consumer to enterprise (like Box)? or other way around?

Cimarron: Still start pretty high up.  Another example (other than Box) of going consumer to enterprise is Evernote.  Everyone who uses it becomes addicted, so enterprises end up having to offer it.

Technique of "if you want to see this you need to join" works really well to entice consumer use of apps.

Michael: Pay attention to how long initial adoption takes.  "Overnight success" is actually "five-year overnight success."

Cimarron: Example is Blackberry. Tipping point occurred on hardware side when people started to move to iPhone, but it took a long time.  Now look where we are.

Michael: Questioned assumption of question that enterprise selling is painful.  It doesn't have to be.

Jay: barrier to me is ease of use on the admin side. Ease/speed of implementation is key to sell in enterprise apps.  Price is low on list (within reasonable constraints).

What do you think about the future of enterprise social media? (Yammer, etc)

Tom: Two barriers: adoption, and marketing organization not understanding. This could be a way for companies to understand their employees' experiences.  Similar to how airlines are responding to customer complaints on Twitter.

Michael: other side of this using this to engage with developers.  Enable communities to self-serve.

Tim: when i think about internal use of social media, I think of this as a replacement for email.  Facilitates communication of knowledge in a faster and easier way.  When you think about designing a product, anytime it involves communication between people, think about how this can help their interaction.

Jay: As we see more employees not congregating in an office space, and workforce is more geographically dispersed, these tools will become more and more useful in the workplace.  Twitter is about business and consumer, not within the business itself.

Question:  Have you seen interesting use cases of enterprise employee wellness apps?

Cimarron: this has been slow to develop.  Seen as an HR app and is not top priority right now. I've seen the gamification of employee programs and this has started to show up on the wellness side too.

Jay: We're growing this part of the business for players.  Have been using gamification to mark player's progress using mobile tools.  Adding an employee on the basketball staff who is a medical technology person.

Tom:  There's actually an HR company in boston that is now getting into the gaming business.  Giving games to employees during breaks because they noticed that employees were using other people's games and this keeps them on their portal during their off-time.

Question: Dropbox vs. Box? Consumer vs. Enterprise? Who will win?

Cimarron: Google is jumping in too and so is Microsoft.  What makes Box so successful is the ecosystem they have built, offering up their platform for people to build on.

In an enterprise setting, how can companies like Evernote compete with Microsoft, which rolls out products to millions of users instantly?

Cimarron: by solving problems that remain in the software.  Evernote has been doing work to address privacy.  People want to share some but not all of their data within their org (work vs. private data).

Tom: Battle needs to be mitigated between consumer desire for open source and enterprise desire for control.
Jay: Will need to compromise on both ends.

Cimarron: Is it about controlling behavior or protecting data?  Lines are becoming blurred between corporate and private life.  In the past, IT controls were about controlling behavior, not about utilizing ad optimizing technology.

Michael:  I am looking forward to the next generation controlling IT.

Tom:  I'm really excited about the disruption that is taking place now.  Mobility is not about "mobile" anymore.  It is so much more than that.  This is a GREAT time to start a company. If there was ever a time, it is now.

Jay:  I think we're ending on a good note.  It is difficult and challenging to find the balance between open and private, but this will be the big challenge and opportunity moving forward.

Cimarron:  We tend to be very American and Euro-centric when we think about these devices, but a huge market opportunity exists outside of these regions. Huge opportunities exist in this area.  We don't know what technologies will win.  This is going to be an exciting couple of decades.

New Funding Model Panel

-- We have moved from monarchy of innovation to crowd-funding where everyone can follow their dreams- Hugo Van Vuren
--  Crowd funding is not just for entrepreneurs but for everyone! - Paul Gu, Upstart
-- Upstart thinks of a person as a start-up-- Paul Gu
-- Crowd-funding investors are concentrated in US and UK
-- JOBS act will not stop the project based crowd-funding
-- Start using Upstart as soon as you can get into a binding contract!!- Paul Gu
-- Most common activity people invest money raised from Upstart in their education and starting a company

-- who are the ideal customers of a crowd-funding platform-
1. Idea campaign owner: People who can identify audience which cares about them and idea, with strong perseverance, ready to accept feedback and who can integrate this feedback-- Bre, Indiegogo
2. Companies which are really successful on FundersClub: Companies which can get funding easily, companies which have been around for a while but for some reason are not really successful, companies for some reason (like present in middle of no where, ideas which do not sell easily)-- Alex, FundersClub
3. Businesses who have maxed out their credit cards

-- How to make businesses sustainable after the first round crowd-funding?
1. People do not understand manufacturing at scale- there are companies which actually fill this gap!!
2. More curation of the project
3. It's worth trying!!

-- What will crowd sourcing for large projects?
1. Indiegogo helped raise a project 12.6 million. So some of these existing funds can sustain it.

--Where will crowdfunding be in 6 years?
1. Completely grown present across the world
2. Crowdfunding will be a natural state and norm

Future Trends in Mobile Technology

Future Trends in Mobile Technology

Panelists Answer questions submitted through Pigeonhole

Moderator: Steve Papa, Founder of Endecca & Investor

Panelists:

Purnima Kochikar, Director of Apps & Games, Google Play

Bob Davis, General Partner, Highland Capital Partners

Susie Kim Riley, Founder & CEO, Aquto

Rajesh Mishra, Founder & CEO, Parallel Wireless

Led by moderator, Steve Papa, panelists gave a survey of the key trends in mobile technology and addressed the following questions:

1. What is the opportunity with Payments?
1. Payments are not the problem, credit cards are easy enough - Purnima Kochikar 
2. NFC payment systems require vendors to install new hardware, making it very unapproachable - Susie Kim Riley
2. Changing the Risk Profile of Entrepreneurship?
1. There is a huge supply of creativity, but, entrepreneurs in different parts of the world fear failure. In Japan, entrepreneurs lose credit profile if their businesses fail. - Purnima Kochikar
3. What are the challenges and opportunities of reaching the next billion users? 
1. Users in emerging markets see mobile engagements in "bit" sizes, need to package business models to - Susie Kim Riley
2. US-style pricing models will not work in other parts of the world.  Compounding the expenses of traditional carrier plans are additional costs like electricity, making the technology  - Bob Davis
4. How will the internet of things change the mobile landscape?
1. The internet of things is the most interesting trend in mobile technology.  Estimates of 20 billion devices connected to the internet by 2020 - Bob Davis
2. Carriers will have to change their product offering in order to meet spectrum requirements - Rajesh Mishra
5. Will Infrastructure be able to support demands required by next billion users and internet of things?
1. Phones are only used 10% of the time, yet they are consuming data 100% of the time. We need to figure out how to more effectively allocate spectrum  - Rajesh Mishra
2. The numbers tell us that there will be a crisis in internet availability, but, confident that smart entrepreneurs will find the solution - Bob Davis
6. How to balance agility + sustainability in the mobile world, where businesses have such a short half-life?
1. Entrepreneurs need to have a larger vision (i.e. Uber is not a transportation company, but, a comprehensive logistics platform) so that can roll-out new services and features - Purnima Kochikar & Susie Kim Riley
2. Content is fickle and it always has been, mobile just makes it more obvious - Bob Davis
7. How to Handle Privacy Concerns? 
1. First task is to prove to users that metadata can be anonymous - Rajesh Mishra
2. Users will opt-in to share data if they get something in return - Susie Kim Riley
8. Android vs. iOS
1. Closed systems do a great job educating the market, but open systems always win in the long run - Bob Davis
2. User experience is key, whoever masters this will win - Rajesh Mishra
3. Poor user experience on low cost Android phones ruins the user experience - Rajesh Mishra
4. This debate will continue forever - Purnima Kochikar

Mid-Day Keynote: Travis Kalanick, CEO of Uber

--Everyone's private driver.

"San Francisco and Paris are sister cities, in that it's equally impossible to get a cab on the street."

"How do we make it so that there is always a car 5 min away from you - through math... Heat map, anti-heat, what you left is under served market."

"Surge pricing is your friend. Higher demand drives higher price, so more cars will join and stay longer, and thus drives supply so no one is stranded."

"If you can deliver a car in 5 minutes, you can deliver anything. Recently we had Uber ice cream, Uber kitties..."

"We give riders high fives and give drivers hugs."

Growing the Startup

Growing the Startup

Moderator: Dave Balter, Global Head of Investments, dunhumby & CEO, Smarterer

Phil Beauregard, Founder & CEO, Objective Logistics

Florian Meissner, Founder & CEO, EyeEm

Jason Jacobs, Founder & CEO, Runkeeper 

Alex White, Founder & CEO, Next Big Sound

Pat Kinsel, Founder & CEO, Spindle

Dave: What are the key metrics, internal and external, to gauge growth?

Depending on the company you are in, these could be a million downloads a month, the no. of searchable photos created daily, registered vs. active users, tracking activity, etc. The internal metrics are more revenue and growth focused, and the external are more broad base and measured in terms of activity, users, etc.

Key metrics are very different depending on which company you're in (B2B, B2C..). The dashboard changes with each iteration of the product and measurement of ROI, revenue per client, etc. For search companies like Spindle, what is most important is the search query volume as this brings in search syndication deals. 

The most important thing to do is to always keep goals and measurement metrics in mind. Key metrics change over time. Growth becomes more important over time but is not crucial at the beginning.

"Do you have enough cash in the bank to achieve your goals?" - Flo

Metamorphosis: Moving to Managers

How do you become a CEO over time and move out of functional areas and more into holistic strategy. The key is the hand-off as you hire more people, decision making, and how do you balance friendships with being the boss. 

"All the world's a stage" - Phil. It's constant evolution; your language changes, you wear a suit for meetings.

"Anything is better than insolvency" - Pat

There is pressure, some hard alternatives to face and you can't be too idealistic any more. There are employees and their families to consider.

"There is no such thing as product market fit; the market is always changing and you are constantly chasing a moving target" - Phil

Internal transition - what do you do? With too much delegation, you might find yourselves out of things to do. You reshape yourself to find things only you can do and then you create a culture where there is transparency and your employees are honest with you.

What keeps you up at night? 

The cash out date (how many days till we run out of money), are the metrics moving in the right direction, are you building the product, and are your employees upset, and if yes, what can you do to remove obstacles so they can do their job. And excitement!

"Work life balance as a father and a workaholic!" - Jason

Key Takeaway

"It's a roller coaster!" - Alex White

"You have to take a lot of punches and refuse to go down" - Phil