the buSineSS of faShion

tWo entrepreneurS talk dollarS and SenSe

Who are you renting?

Rent the Runway delivers fashion for less

Sometimes an idea makes so much sense it’s hard to believe no one thought of it before. That’s the case with Rent the Runway, a membership-based website that rents high-end fashions such as Calvin Klein and Badgley Mischka. In April, founder Jennifer Hyman, a twentysomething Harvard MBA, addressed FIT students at a Business and Technology Dean’s Forum. Hyman raised millions from venture capitalists for the business, which launched in 2009 and now employs 200 people.

Site members rent dresses and accessories for four to eight days, choosing from more than 170 designer brands, at 10 to 15 percent of the retail price. They are sent two sizes of the chosen style to allow for variances in fit. For an extra $25, they can receive an additional outfit. Dry cleaning is included in the cost; insurance is $5 extra. Afterward, renters slip everything in a pre-paid envelope and drop it in the mail.

Initially, Hyman said, high-end designers didn’t like the idea of people renting their clothes, but they also told her that most of their customers were in their 50s and 60s. Hyman says the site encourages young people to value “aspirational” (read: luxury) labels. “Over 50 percent of the time, customers end up buying something from the brand,” she said. Many women buy outfits from department stores, wear them to a special event, then return them for a refund the next day. “We’ve simply legalized this practice,” Hyman said.

he guarantees it

The co-founder of Men’s Wearhouse shares four decades of business wisdom

“Doing the right thing isn’t free, but it’s not as expensive as you might think,” said George Zimmer, co-founder and former executive chairman of Men’s Wearhouse, in a talk at FIT in May called “Conscious Capitalism: Building and Sustaining a Values-Based Corporate Culture.” In his signature growl, Zimmer—easily recognizable from his “You’re gonna like the way you look” tagline in the TV commercials—laid out the company’s employeecentered ethical practices.

In 1973, Zimmer and his college roommate started Men’s Wearhouse with $7,000. “We didn’t have a cash register; we had a cigar box,” he said. “We’d write out receipts by hand. It was not materially different from a lemonade stand.” Now it’s a multibillion-dollar, publicly traded company.

He explained that Men’s Wearhouse strives to benefit its employees and customers as strongly as its shareholders. The company pays 70 percent of employee health insurance premiums and offers child care at its corporate offices. Other perks include offsite trainings and lavish holiday parties. Managers, often promoted from within, are rewarded by their ability to create success in others. Even employees who steal from the company are given a second chance.

As a gesture of solidarity, Zimmer always limited his own compensation to ten times the salary of the average store manager. (He stepped down as CEO in 2011.) “The single most important element of organizational success is trust,” he explained. “The leaders need to be winners who inspire people.”

He also recommended that students start their own businesses. “Corporate America is less trustworthy today than when I was starting out,” he said. But he encouraged budding entrepreneurs to get some experience, first at retail, then at a design house, and at some point “try to have one good flash of accounting.”