Rent The Runway’s Jennifer Fleiss On Giving Capital- Efficient Businesses An Edge

It’s not easy being bootstrapped in a world full of venture capital (VC)-backed players.

Bootstrapped players are capital-efficient, inventive and profitable nearly from Day One — that is if they want to stay in business on Day Two, Year Two and the subsequent years after that. Without the VC checkbook to fall back on, the bootstrapped business has to be focused on finding a product/market fit that also pays the bills.

It’s also a type of businesses can be underappreciated in a world where its VC-backed counterparts can skip over concerns like profitability in a mad quest to build scale and capture market share and attention complements of a VC-funded checking account. It’s something that Jennifer Fleiss, co-founder of Rent the Runway and now venture partner at Volition Capital told Karen Webster she is intimately familiar with.

“We’ve lived through a [pre-pandemic] phase where the economics were different,” Fleiss said. “I think of the ridesharing industry as one great example of where money was spent, and there was an excess of what a customer would pay over their lifetime. There was a certain economic model at times that represented competitive warfare, and it didn’t necessarily add up. And it’s hard to impossible for a capital-efficient business to ever compete with that — mostly because it’s not rational business behavior.”

The market, she said, has moved on from that — well, some parts of it have, more or less. But there is still the stark reality that the firm that raises a lot of funds can funnel that money into hiring top talent, press exposure, marketing and customer acquisition to a greater extent than a bootstrapped firm can.

The Volition Challenge

Looking to better balance that playing field is what brought Fleiss — fresh out of her last engagement heading up Walmart’s personal shopping service Jetblack — to Volition Capital. It’s a firm focused on capital-efficient startup firms across what she described as a “wide range of verticals” with funding generally in the $10 million to $40 million range. These are firms that have not had nor sought outside funding in the past.

Volition, she said, isn’t trying to force funds on firms that like being a small, tightly held business, and there are many like that. Instead, Volition offers a better experience that gives founders — who want to scale and grow and need capital to do it — a feeling of having a seat at the table, instead of feeling that they’ve signed their business and the blood sweat and tears of building it away to an investor that may not share their vision or values.

“The thing I relate to is the idea that as a founder, you probably care deeply about a business, and you want to still feel like you have the control and the biggest voice at the table when driving the business,” Fleiss said. “I think it’s blending that feeling with this real ambition and desire to grow. What I like about Volition is they’re really aligning their interests and their seat around the table with the founders.”

And she said she enjoys the opportunity to guide the up-and-coming generation of entrepreneurs, many of whom are digital frontrunners who’ve mostly enjoyed a series of pandemic-related tailwinds as consumers have increasingly shifted their lives onto digital channels. It’s a familiar path, and one where she gets to often repeat the mantra she and her co-founder developed when she was at Rent the Runway attempting to acquaint high-fashion consumers with the idea of renting clothing instead of buying it.

The Importance Of Patience

Patience, she said, is as important as an eye for opportunity. There are about to be many of opportunities as digital has enabled an amazing number of them over the last year, and the difference that has made in people’s lives has been remarkable.

“Crawl, walk, run,” she said. “What I often see is an entrepreneurial personality [that] just wants to go, go, go. How do you marry that with an understanding that an industry can take time to evolve and develop, and there needs to be patience around that?”

But, she said, there are still problems to be solved and innovations in need of perfection.

Subscription services work great, she said, when they are connected to things that consumers’ routines use on a knowable time schedule. They work less well when consumers lose track, over order, and end up with a basement piled floor to ceiling with boxes of plastic wrap they aren’t going to live long enough to use. The start of subscriptions done right is there, she said, but a lot of work still needs to be done around personalization and curations in terms of what consumers are getting.

And in fact, she said, there are a whole lot of such imperfection points in the editorial economy waiting for the digital innovator to come along and solve them.

“A lot of businesses that I’m excited about touch goals like solving the backlash against digital, solving things like this plethora of choice, solving the annoyance of returns, solving for how to do a nice and thoughtful gifting process online,” she said. “I think there’s a lot of things that digital has not solved yet and more opportunities there.”

And there are a lot of firms that have the resilience, creativity and discipline to start solving these problems, she said. They just need a new kind of funding relationship, or partnership, to help them build the scale they need to be competitive.