May 2, 2011, 9:00 am

Rent the Runway Takes Flight

http://bits.blogs.nytimes.com/2011/05/02/rent-the-runway-takes-flight/?ref=business

By JENNA WORTHAM

When Rent the Runway, a New York start-up hoping to make high-end fashion as accessible as renting a movie from Netflix, first introduced its service in late 2009, it wasn’t clear how successful the venture would be.

Would women want to rent designer dresses by mail the same way they do movies or books?

As it turns out, the answer seems to be yes.

In the past 18 months, since Rent the Runway came out of its beta testing phase, it has enticed a million members to join the service. Each week, another 40,000 new members sign up, the company said. The company has raised $16.5 million from venture capitalists, and grown from a few employees to 51 staffers, prompting a move to larger offices in downtown New York.

The company has also expanded its closet to 135 from 25 different designers, attracting larger fashion labels like Vera Wang and Calvin Klein, and adding jewelry and handbag offerings.

But perhaps the most important marker of success is that the company began generating a profit at the end of March.

Jennifer Hyman, who co-founded the service with Jennifer Carter Fleiss, a friend and classmate from Harvard Business School, said this time of year — when women are looking for new dresses for proms, summer weddings and other festive events — is a busy time for them. But she said she believes the recent momentum is a sign that customers are satisfied with their experiences, and encouraging friends and colleagues to sign up as well.

“There is a seasonality to our business, but the recent growth is more than that,” she said. “We are in the business of selling an experience, helping make an occasion more memorable, and people enjoy telling their friends about us.”

Ms. Hyman acknowledged that the growth has not come without some bumps in the road.

“Over the last two months, our orders have quadrupled,” she said. “There’s been unprecedented growth, and there have been some issues where we haven’t been able to ship everything that was ordered.”

For example, she said, the company shipped 10,000 items last week alone and had trouble filling 2 percent of those orders.