Session 5: From Idea to opportunity II

Tuesday, January 22, 2019

This is the second of three sessions where we discuss the differences between an idea and an opportunity. This startup that has found initial success and now must determine how fast to grow. In January 2010, two months after a successful launch, the co-founders of Rent the Runway (RTR), a website that rented designer dresses, are debating whether to grow their startup at a measured pace and focus on improving operational effectiveness, or raise a new round of venture capital sooner than originally planned. Raising more venture capital would allow RTR to aggressively expand its inventory and customer acquisition efforts, in order serve a broader range of customer segments with a wider selection of products, including accessories and even maternity wear.

Quote of the Day
To succeed, jump as quickly at opportunities as you do at conclusions. Benjamin Franklin

OAP Term Project
After this class session is over, one person from each team should submit via Canvas a short document containing a list of ideas for opportunities to evaluate as part of the OAP term project.

Required Readings:
Study Questions:
  • Review the slide deck models of Session #3 and the Term Project (OAP) section of this website.
  • Create a timeline of actions undertaken by Rent the Runway’s co-founders. Do you agree with the decision to pursue each action? Which actions were important in validating business model hypotheses and refining the concept? Can you suggest different actions that the co-founders should have taken?
  • As the case ends in January 2010, the co-founders are considering whether to:  (1) stick with their original plan to pursue operational improvements in 2010 before raising more capital in early 2011; or (2) accelerate fundraising in order to expand inventory and product range, enabling RTR to serve a broader set of customer segments and usage occasions. What would you do about this decision?
  • At that same time, identify the major risks in each of these categories: market, team, product, technology, business model.

Online Assignment: (Policy on Case Analyses.) - Group A teams only submit

As co-founders of Rent the Runway, assume you will raise additional capital now in early 2010. Using any of the models and methods introduced so far in E145 sessions, the readings, and information shared in the OAP section of the website (term project), describe the essential elements of a short pitch (say 3-5 minutes) that Jenn and the leadership team could use when first contacting potential investors. Be prepared to role-play this pitch in class.