ThredUp’s Founder Shares His Formula for Developing a World-Changing Business

Thursday, January 9, 2020

By Justin Biel, trends editor at Grow Wire
 4-minute read

A split photo showing a ThredUp sellers kit and company CEO, James Reinhart.

In short:

  • James Reinhart founded ThredUp to get rid of his old clothes, then grew the company into the world's largest fashion resale marketplace with a mission to prevent fashion-related carbon emissions.
  • ThredUp is now a force in the booming apparel resale market, a $24 billion industry that’s growing 21 times faster than retail.    
  • Reinhart's formula for developing a world-changing business involves attacking big problems head-on and seeing positive impact as a fundamental business element.

 

  

In 2009, James Reinhart founded ThredUp, a marketplace for buyers and sellers of used clothes with a focus on kids’ and women’s apparel. Today, the company carries over 35,000 brands, lists 45,000 new items every day and is the world’s largest fashion resale marketplace.

 In addition to offering a service for individuals to buy and sell used clothes, ThredUp’s “choose used” stance on clothing aims to reduce some of the fashion industry’s impacts on the environment, such as carbon emissions and water usage. According to a report by the United Nations Economic Commission for Europe, the fashion industry is the second-highest user of water worldwide and is responsible for 10% of global carbon emissions. 

The mission is dear to Reinhart, who hopes to inspire “a new generation to think secondhand first” when choosing clothing.

Speaking at NPR’s How I Built This Summit 2019, Reinhart explained how he got the idea to start ThredUp and gave advice for developing a company that has a positive impact on the world.

 

The origin of ThredUp 

In 2009, Reinhart had a closet full of clothes that he didn't wear. To make some cash, he took them to a thrift shop that politely informed him of two things: He didn't have brands that it would carry, and, more importantly, it didn't take men's clothes.

To see if others had faced similar problems, Reinhart started informal market research, interviewing “every man, woman and child” on the street and at Harvard University, where he was pursuing master’s degrees in both business and public policy.

James Reinhart came up with the idea for ThredUp while pursuing master's degrees at Harvard. James Reinart speaking onstage at TechCrunch Disrupt San Francisco 2019.

“Not a single person said they wore over half their clothes,” said Reinhart. “The average person said they wore one-third of their wardrobe.” 

He also learned that most owners gave their clothes away upon evicting them from their closets. He saw an opportunity to create a more effective way for consumers to exchange clothes they no longer used and make money for themselves in the process. 

"There were hundreds of millions of dollars in people's closets that weren't being accessed," he said.


"There were hundreds of millions of dollars in people's closets that weren't being accessed."

 


Enter ThredUp.

 

The evolution of ThredUp

An early version of the ThredUp website connected sellers of previously-owned clothing to buyers, but the company never touched the physical inventory. Reinhart quickly realized this system wasn’t going to be successful.

“People wanted us to do all the work,” he explained. 

The company listened to this consumer feedback and switched to a more hands-on strategy. Today, sellers mail their used clothes to ThredUp, and the company handles all warehousing, inspection, shipping and pricing. Overall, the company’s Upcycle Centers have redistributed over 65 million items, then sent the original owners a cut of the consignment sale price. 

ThredUp inspects, photographs and lists clothes sent by sellers. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

A post shared by thredUP (@thredup) on

“We now run the two largest garment-on-hanger facilities in the world,” said Reinhart of the operation.

 

ThredUp now runs the two largest garment-on-hanger facilities in the world.

 

ThredUp also estimates its efforts have prevented 1.4 billion pounds of CO2 from entering the atmosphere, the equivalent of taking 48 million cars off the road for a day. They have also conserved approximately 2.7 billion kilowatts of electricity and 6 billion gallons of water that would’ve been used in the production and disposal of clothes.

 

Advice for building a business that does good in the world

Reinhart is a proponent of building businesses that make a positive impact on the world. In his conversation with Guy Raz at the Summit, he shared advice for those looking to do the same.
 

  • Attack a big problem.

Reinhart encouraged entrepreneurs to think in terms of solving problems that significantly impact the world. ThredUp arose to help folks get rid of unused clothes, but it also aims to solve the “big problem” of carbon emissions associated with the fashion industry. 

For further reference: The production of new clothes is predicted to comprise a quarter of the world’s carbon budget in 2050, per a report by the Ellen MacArthur Foundation. Worldwide, an entire dump truck of textiles is dumped or burned each second. 

 ThredUp's resale marketplace combats the negative impacts of the fashion industry.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

A post shared by thredUP (@thredup) on

By reducing the amount of new clothes that consumers purchase, ThredUp plays a role in reducing those environmental effects. Your company can win by doing the same, Reinhart said.

“There are lots of big problems in the world,” he said. “Find one and solve it.”
 

  • Create a business that does good just by being in existence.

Reinhart advised entrepreneurs to build businesses that place do-gooding at their core, versus beyond it. 

For example, by simply doing business, ThredUp has the potential to renew society’s interest in buying used clothes and thereby relieve pressure on Earth’s precious resources. According to ThredUp, if everyone simply bought one used clothing item instead of a new one this year, the world could save 25 billion gallons of water while avoiding 5.2 billion pounds of CO2 emissions and 449 millions pound of waste.    

"If you can build a business that's good in and of itself … you have a greater chance of success,” said Reinhart.


"If you can build a business that's good in and of itself … you have a greater chance of success.”

 


 

 

Doing good is good business     

A decade into the business, ThredUp is not slowing its roll. In 2019 alone, the company secured $175 million in funding and inked partnership deals with retailers Macy’s and JCPenny for its “Resale as a Service” program, which “will allow retailers to add ThredUp products to their stores or websites, and customers to send their old clothes to ThredUp in exchange for shopping credit to buy new items.”

ThredUp’s story proves that benefitting the planet with a novel solution to a business problem is always in fashion.

sign up for the growwire newslettersign up for the growwire newsletter