Unconventionals Podcast | Season 2 Episode 2

Warby Parker: Transforming an Industry

On this episode of The Unconventionals, host Mike O'Toole chats with Neil Blumenthal, cofounder of online eyewear retailer Warby Parker.

Once labeled by GQ as "Netflix for glasses," Warby Parker has set out to change the perception that buying a pair of fashionable eyeglasses doesn't have to be a long-term and costly investment. In addition to a hearty entrepreneurial spirit and a start-up process with stories you'll have to hear to believe, Neil shares the true backbone of Warby Parker: Their dedication to giving back.

Not only does Warby Parker aim to make fashionable eyewear affordable for the widest audience possible, they strive to give the gift of sight to those in need. This unconventional yet admirable tactic took the company to new heights of credibility and notoriety, and they're not done yet.

Video Highlights

PODCAST TRANSCRIPT

Speaker 1:

Next on PJA Radio: The Unconventionals.

Neil:

So I start to design glasses according to the needs and wants of the communities where we were working. Lo and behold, in the same factories where I was manufacturing glasses for people living on less that $4 a day, I would see on the production line next door, Marc Jacobs glasses coming off the line and all these major fashion labels. You discover that there’s a disconnect between what it costs to manufacture glasses and what they’re being sold for.

Mike:

I had an eye exam about 6 months ago. My prescription changed a bit and I needed new glasses. I go to an optometrist here in Harvard Square, and the doctor says, “Well, it’s good timing. Our frames are 20% off this month.” I found a couple pair that I liked, and the discounted price was 600 bucks. I don’t wear glasses all the time. It just seems like a ridiculous amount to pay. This is how I met Warby Parker, our guest today. Warby Parker is an online retailer. They sell eyeglasses, but they sell beautiful glasses. They have their own designers. These are glasses made from exactly the same materials as the $600 Hugo Boss glasses I was looking at. In fact, they’re built in exactly the same Chinese factories.

I paid $125 for my Warby Parker Walbin frames. That’s for everything: lenses, coatings, all the stuff that typically costs you extra. This felt like a great find for me, and it’s one that I love to tell people about. It’s also an awesome model to build a business on. Who isn’t interested in paying 75% less for the same thing? This is Warby Parker’s value proposition, and they’ve been enormously successful since their start up a few years back. Along the way, there were some pretty big obstacles. They had to figure out product design that would past muster in the fashion world, and they had to convince people to buy glasses online. This is a product that we want to see on our faces before buying.

Warby Parker overcame these obstacles, and would be a great story if it stopped there, selling great glasses for a fraction of the cost by cutting out the middleman. What makes the company truly interesting a natural fit for the unconventionals is that they do a whole lot more than this. They were founded with an explicit social mission: For every pair purchased, they give a pair of glasses to someone in the developing world. In a culture where companies are started with the intention of selling out to the highest bidder, Warby Parker set out to create a brand and a culture and a company that will last.

We visited Warby Parker’s head quarters in New York City’s Soho neighborhood, and talked with Neil Blumenthal, founder and Co-CEO. To understand the company you have to start a few years ago in The Hague.

Neil:

I think the journey’s probably not typical. I guess every entrepreneur’s journey hits different places. I had originally gone to school to [inaudible 00:03:06] to study international relations and history. I was really passionate about foreign policy in particular, thought that I might end up working for the State Department. Was really passionate about wars and thinking that if we could actually help prevent them or end them, that we could focus on the big issues like health and education. Immediately following my undergraduate, I traveled to The Hague and studied international mediation and negotiation and conflict resolution. I returned back to New York to work at the International Crisis Group, which is a think tank that comes up with policies to resole deadly conflict. Really found it intellectually stimulating, but was finding that I wasn’t able to have as much of a direct impact as I wanted.

When you’re doing policy work, ultimately you can come up with great ideas, but it’s really about the people in positions of power, the politicians, or in this case, also war lords that have the power to implement change. It was at that point where I was looking to see, “What should I do next?” I met this really dynamic eye doctor, Jordan [Casalow 00:04:14], who had this great idea to train low-income women to start their own business selling glasses in their communities throughout the developing world. I didn’t know, but close to a billion people on the planet don’t have access to eye glasses. To me, that was insane.

Mike:

It’s an instinct or a need that I think is recognized to some degree. Aren’t there non-profits that send first-world used eye glasses to third-world countries?

Neil:

There definitely are, but not at the scale to really solve this problem. To get a billion pairs of donated glasses it’s not feasible. Not to mention that, people are losing a breaking their glasses. Their prescriptions are changing, and each year more new people need glasses. You needed a sustainable solution. I thought that this idea to create jobs without giving eye exams and selling affordable glasses just made a ton of sense. So I moved down to El Salvador to work on the pilot program. Ended up becoming a director of this non-profit Vision Spring and spent 5 years expanding the program to about 10 different countries. One thing that you find is that when you treat people as value-conscious consumers, you treat them with dignity, give them the choice to buy, you learn a lot versus just giving away used glasses.

Mike:

It turns out maybe people don’t really like wearing used glasses, right?

Neil:

Exactly. Just because people don’t have a lot of money doesn’t mean they don’t care about how they look. I literally meet people, it could be northern Bangladesh, who’d rather be blind than wear a donated pair of 1970s cat eyes. They get laughed at by their friends and neighbors. I start to design glasses according to the needs and wants of the communities where we were working. In parts of India and Bangladesh it was gold wired, gun metal frames. We’d go over to China to manufacture them. Lo and behold, in the same factories where I was manufacturing glasses for people living on less that $4 a day, I would see on the production line next door, Marc Jacobs glasses coming off the line and all these major fashion labels. It was there that you discover that there’s a disconnect between what it costs to manufacture glasses and what they’re being sold for.

Mike:

Neil’s insight at Vision Spring, that it made more to him to people as consumers instead of charity cases, led him back to the States to pursue an MBA at the University of Pennsylvania’s Wharton School of Business. As Neil went on to tell us, a friend of his at Wharton, his now co-founder Dave Gilboa, had just left a pair of $700 eye glasses in the seat back pocket on a recent flight. That had sparked a discussion about how the high retail cost compared to the extremely low manufacturing cost that Neil knew about from his Vision Spring days. This is where Warby Parker was born.

Neil:

We knew that glasses would eventually be sold online. The advantage to us by selling online and building a business through e-commerce was that we could have direct relationships with our customers. We could design our own glasses, work directly with the factories with whom I had relationships with, and then sell them to customers, and basically give customers all of that retail markup. Because we were going to do it under our own brand, there’s no licensing fee.

Mike:

Curse me, there’s different ways to go. You could just really try to make this about cheap eye glasses online, but you didn’t go that way.

Neil:

Yeah. I think this business, Warby Parker, really came from our own personal experiences walking into an optical shop, getting excited about a pair of glasses, and walking out feeling like we overpaid. The story’s that we paid too much, but we also wanted beautiful glasses. We also think that glasses stand for something and brand is important. It wasn’t just about getting a bunch of cheap glasses and selling it online. It was about, “How are we going to transform this industry that’s been ripping people off for decades?”

Mike:

When Neil refers to “this industry,” he’s really taking a shot at a single company, Luxottica, who along with owning some of the biggest brands in eye wear, like Ray Ban and Oakley and Chanel, also owns 3 of the largest retail companies. LenCrafter’s one, and the second largest vision insurance company. They’re a virtual eyewear cartel. We’ll really get into Luxottica later in the program, but it was obvious right from the start that Neil and his partner saw a big, fat, and satisfied monopolist, and recognized an opportunity.

Rita Gunther McGrath, who’s a professor at Columbia Business School, has written a book called The End of Competitive Advantage, and she talks about exactly these kinds of opportunities. Her advice: The would be disruptor first needs to select a target, and there’s no better target than a lazy incumbent. Better yet, an entire niche or setting in which multiple incumbents have enjoyed a privileged position for a long time. Sounds an awful lot like Luxottica and the eyewear industry.

Neil:

That got us excited about the industry. You look at these dynamics. It’s massive industry, $65 billion a year globally, $22 billion alone in the US, and dominated by 1 particular company.

Mike:

Luxottica.

Neil:

Luxottica. They do about $7 billion a year in revenue. They’re vertically integrated. From a business student perspective, it’s a beautiful business. From a consumer perspective, it may be inflating prices. If you look at the price of Ray Bans in the ’70s, they were like $30. Today, they’re $150 plus. We thought that there was an opportunity here where we could come in, build our own brand, design glasses that people want, and sell them through WarbyParker.com for $95 including prescription lenses, instead of $500.

Mike:

There it is. 95 bucks for extremely fashionable frames and prescription lenses, all available with the click of a mouse. We’ve seen this shift before. Zappos did it with shoes. Blue Nile did it with diamonds and engagement rings. As you can imagine, with an industry that had yet to see this kind of transformation, there were some big questions and obstacles. Neil wondered if people would buy glasses online. It’s such a personal purchase, one that’s pivotal to expressing your style. They knew people wouldn’t buy without the ability to try pairs on. Their first solution was software thaw allowed users to upload a photo of themselves and engage in a virtual try on, but as Neil told us, they did a gut check and decided that the technology was good but not great.

This ultimately led to the idea of a home try on. The way this works is as a customer, you pick 5 frames, which are shipped free of charge, to try on at home. After 5 days you ship them back, again free of charge, along with your decision about which frames you like best. Their other obstacle was the website. If you’re just selling cheap eye glasses online, you can slap together a site, but if you’re Warby Parker and you want to create a fashion brand and also convince people to change behavior and trust that you can get the perfect frames from a website, you need to really sweat the user experience. Sweat it they did.

Neil talked about how they spent months using PowerPoint to mock up wire frames of the site and testing it with friends. The common theme here is that these guys had a completely different mindset than a typical tech start-up. It was obvious that they understood the importance of getting the customer experience just right. Neil likes to challenge the tech start-up notion of minimally viable product, which is part of the tech start-up cannon. What this says is, “You need to be lean, get an acceptable product out there, and don’t hold out for something perfect.” While there is a lot about Warby Parker that is lean and scrappy, the minimal viable product shouldn’t get in the way of your minimal viable vision. That’s what makes the Warby Parker story so great. They’re living in this hybrid world between a tech start-up and the fashion lifestyle brand, and that’s not easy to do.

Neil:

I think it is hard. I would say that we have viewed ourselves as living in 3 distinct worlds. 1 is this sort of this fashion lifestyle world. The other is indeed the tech start-up world, and social enterprise world. In terms of tech and start-up, how can we be scrappy? How can we move quickly? We started this business with only $120,000 and very much believe in technology and being data-driven. I think the fashion lifestyle piece was just being a little more thoughtful than your typical tech start-up in terms of, what is the brand? What does it stand for? Will is resonate with people? For us, we spent a lot of time thinking about, what are we and are we not? What do we stand for? What are our core values? Debating words like “collegiate” versus “preppy,” where one stands for self-improvement and learning and the other stands for a style of clothes and perhaps a socioeconomic status.

Mike:

I imagine the former won out there.

Neil:

Absolutely.

Mike:

more collegiate than preppy.

Neil:

Yeah.

Mike:

Yeah. You guys decided to not go into … When you try to build awareness for the company, it wasn’t going to Wired, necessarily. You were looking more towards the fashion world in terms of media. Is that right?

Neil:

Absolutely. The question is: What informs your fashion buying habits? It’s not really the tech media. It’s the fashion media. We were really deliberate in targeting the best men’s book and the best women book, which is GQ and Vogue. If you think about the first 3 things we invested in, it was our first collection of glasses, it was our website, and it was PR. In February 2010 we launched. We launched to features in Vogue and GQ, and the company took off like a rocket ship. We hit our first year’s sales target in 3 weeks, sold out of our top 15 styles in 4 weeks, and accumulated a wait list of about 20,000 people and it was just mayhem.

Mike:

Wow. A wait list of customers is not necessarily … It’s awesome, but also it’s got to be nerve wrecking, right?

Neil:

It was terrifying.

Mike:

Did those people stick around?

Neil:

Thankfully they did, but again we were full-time students when we launched the company. We would literally cut class just to answer the phones and respond to customer emails. We tried responding to customer emails while we were in class, but we then got caught because we were typing so loudly that the professor stopped talking. Then everybody in the class looked at us and we were still typing. It was clear we weren’t taking notes.

Mike:

You didn’t run a lot of ads in the beginning. That wasn’t how you guys did it. In a way you were disruptive in what you want to do the market. You also were unconventional in how you thought about your marketing.

Neil:

Yeah. We really want to build a business through word-of-mouth, through press, to introduce the brand through credible sources. That was because we wanted to build a long-lasting brand. We’d also seen and heard from some of our professors at Wharton that that was actually cheaper to do, and in the long run leads to higher customer lifetime value. There have been a lot of studies that show that customers that come in through word-of-mouth actually are more loyal, will purchase more over time, than customers that come in through advertising. It makes sense because you trust your friends. What we would always try and do is figure out, “What can we do that people will want to talk about, that the press will want to write about?”

The home try on program was a classic example. It filled a need, but it ended up being this great marketing tool-

Mike:

It’s novel right? It’s an interesting story.

Neil:

Exactly. GQ called Warby Parker “the Netflix of eyewear.” Now as we continue to grow, we built a mobile store out of a old yellow school bus. We literally bought an old yellow school bus, ripped out the seats, put in beautiful oak shelves, and now it’s in its tenth city over the last 6 months. We call it the Warby Parker Class Trip. It’s got its own website, WarbyParkerClassTrip.com, and it allows people to interact and feel the brand in a different way. When you buy a pair of glasses on the bus, it actually comes in a brown paper bag just as a lunch [crosstalk 00:16:27].

Mike:

You’re on the school bus. Yeah.

Neil:

Those little moments, those details that are unexpected lead to conversations. Over 50% of our traffic and sales is driven by word-of-mouth.

Mike:

Also, it’s a different way to think about marketing. Marketing, I think, has become almost a layer of abstraction between the company and the … Here’s a slick surface that will give you a sense of what we’re all about. It sounds like you’re doing the opposite. It’s trying to expose who you guys are as people, your culture, and hope that people want to be a part of that.

Neil:

Yeah. I think the Internet has fundamentally changed branding and marketing. You used to really be able to control your image through literally a glossy ad in a print magazine. Now with the Internet, there’s so much access to information and consumers are consuming it and demanding it. It’s not just good enough that your ad campaign looks good. People need to understand the inspiration behind it, how it ties to the brand. Who are the people behind the brand and the employees that work there? What do they care about? Where’s the product made? How is it made? There’s a lot more depth that is required, and there’s now infinite space that you can share those stories and customers can learn about who you are.

Mike:

Coming up we’ll talk more with our guest, Neil Blumenthal, Co-Ceo of Warby Parker. Neil and I will explore Warby Parker’s mission of building a profitable and scalable company, that also does good in the world, and how they believe that mission is the best way to compete in an industry dominated by an incumbent like Luxottica.

Speaker 1:

You’re listening to PJA Radio’s The Unconventionals. If you’d like to learn more about our show, check out our Facebook page, Facebook.com/unconventionalsradio. Our academic sponsor for The Unconventionals is the Center on Global Brand Leadership at Columbia Business School, which turns the research of academia’s foremost thinkers on branding into political tools and insight for real-world application. For more information visit GlobalBrands.org.

Mike:

Welcome back to The Unconventionals. My guest today is Neil Blumenthal, founder and Co-Ceo of Warby Parker. Warby Parker launched in 2010 and is shaking up the eyewear industry by offering fashionable glasses at insanely low prices, starting at 95 bucks for frames and prescription lenses. As you heard earlier, GQ went so far as to call them “the Netflix of eyewear.” As owners of multiple brands, retailers, and even a vision insurance company, Luxottica claims to have over half a billion people around the world wearing their glasses. Warby Parker is taking a punch, in fact multiple punches, at the giant. I was curious as to whether Luxottica had noticed them, and more so if they’ve responded.

Neil:

I guess when you’re selling half a billion glasses it doesn’t matter. I think that’s really tough for incumbents to compete with insurgents. They’re just not designed to. For them to compete with us on price and bring down their prices to $95, they would cannibalize their own sales. It takes a really brave leader to be willing to do that and reinvent themselves, but I think that these large companies need to start looking themselves in the mirror and taking a lot more risks. Change is happening faster than ever before. It used to be that companies had to make drastic change maybe once every 50 years.

You look at American Express. In 1958, they were working with a management consulting firm that told them not to get into the credit cad business because it would cannibalize traveler’s checks. Can you imagine if American Express accepted that advice? Now you have these big companies that need to be making those decisions, not once every 50 years, not once every 10 years, but now once every couple years. The question is: Will the big guys be able to have that appetite for risk that they need?

Mike:

One way is, you develop an appetite for risk, or you just buy the people who took risks. Luxottica’s done that. They bought Ray Ban and Oakley, which I’m sure, still cool brands, but at one point were cool, independent companies. You guys must talk about this, but if Luxottica came to you with a really big check in hand, what keeps you guys from saying,”Awesome. Let’s do it.”

Neil:

Our goal is to build this lifestyle brand that’s going to have massive impact in the world. Obviously I’m not in the position to have a big check in front of me, but the hope … That’s not going to be the only consideration. Can we affect the change that we set out to by being acquired? I’m not so sure. I don’t know of really impactful brands that are subsidiaries of other companies.

Mike:

A common theme on The Unconventionals is that starting a business is about changing the world in some important way. It’s not just about selling the company and cashing in. In a world where the story line seems to be the norm, it’s refreshing to hear contrary opinions from company leaders. Neil also mentions that any decisions about the future of his company will rely heavily on whether or not their social responsible missions can be maintained. What are those missions? Warby Parker’s focus isn’t just on selling great glasses and keeping customers happy. That’s critical, but table stakes. They’re also driven to reinvent the optical market, to be a force for good, to create a culture that cares about its people. That’s an awful lot to be concerned about. I asked Neil if it was tricky to balance all those things, especially for a start-up.

Neil:

We think about this in terms of the mission and what do we want to accomplish, and why do we wake up and get excited to come to work every morning? If you ask anybody here in the office, it’s really 2 things. 1 is we want to radically transform the optical industry and transfer billions of dollars from the Luxotticas of the world to normal people. The second is to build an example of a business that is scalable, profitable, but does good in the world and doesn’t charge a premium for it. We think that that’s a powerful idea, and we need more examples of this. That way more entrepreneurs create businesses in this model and that more Fortune 500 executives steer their companies in this direction. Ultimately, businesses can be and should be a catalyst for good.

Mike:

I completely agree. I think it’s funny, but that’s not necessarily what we’ve grown up on. There’s a sense that there’s business and then there’s your passions and those are 2 different things. There’s making money and then there’s doing good in the world, and those are 2 different things. It doesn’t sound like you see them as 2 different things.

Neil:

Yeah. Definitely not, and it’s crazy that we’ve created that separation, especially since the majority of your day is spend at work. You should be doing something that you love and that you enjoy. Also, now with mobile devices, there’s no separation between work and personal life anymore. If that merger is taking place already, then you might as well do it in a way that you enjoy. Most people want to have a positive impact. Frankly, the world currently demands it. The problems that we face as humanity is more complex and larger than ever before, and volunteering on the weekends is not going to solve it.

Mike:

It occurs to me when I talk to you, it doesn’t really sound like you’re a business person. I don’t mean that in a bad way. The way you talk about your company doesn’t sound like you’re talking about a business so much.

Neil:

Yeah. I guess that could be a compliment. I definitely come from the non-profit world. Although the MBA part of me probably is whining right now. We’re trying to … To some extent I think of myself as a coach, and I think of Warby Parker not so much as a business or even a family, even though we have aspects that are very familial. It’s almost more as a sports team where people have joined Warby Parker because they want to achieve something great. They want to win the championship. They’re going to bust their butts and they’re going to hold each other accountable to do that. Where as in a family you’re born into it and you didn’t choose to join. You tolerate the drunk uncle.

Mike:

No drunk uncles in Warby Parker.

Neil:

Exactly.

Mike:

They don’t last, I imagine.

Towards the end of this year’s NBA regular season, Indiana Pacer center, Roy Hibbert, was part of a small social media meme that stemmed from a post-game press conference. If you don’t remember it, here’s part of the presser from NBA.com.

Roy:

How you guys doing tonight? You guys all right?

Speaker 5:

Yeah. How you doing?

Roy:

I’m doing all right. I asked my teammate Paul if I should do this. This is my first time at the podium basically all year. A lot of people always wear crazy get ups and stuff like that. I said to myself before the game, “I’m going to have a great game tonight.” I was advised by Paul George and David Benner not to set a trend by wearing a manacle. So I’m not putting on the manacle, but go ahead and ask questions.

Mike:

The manacle Roy is holding just happens to be a Warby Parker manacle, appropriately named The Colonel. The interesting part to this story, is that when he eventually dawned the eye piece, most people thought he looked ridiculous. That’s what started the social media frenzy. Now, NBA post-game fashion has become a hot topic debate in recent years, Miami Heat guard Dwayne Wade seemingly always at the forefront. It brings up an interesting questions. There’s nothing more fleeting than social media memes and fashion trends. I asked Neil if it was difficult to build a lasting company in this world.

Neil:

Yeah. I think our point of view is classic American heritage, beautiful design that is timeless. One of our design principles, and I have it written down for everybody to see, is we will not design anything that we will be embarrassed wearing in 20 years. I think that we can build a brand around that and still take risks from a fashion standpoint. As long as they’re roots in classic, beautiful design, I think we’ll be in good shape.

Mike:

Next time on The Unconventionals, what does it mean if all of us have the potential to be makers and product manufactures? We’ll be talking to Bree Perez, founder of MakerBot, the pioneer in 3D printing.

Speaker 1:

The Unconventionals is written and produced by Mike O’Toole with Reed [Mangin 00:28:26]. Post production and technical direction by Reed Mangin with Emanuel [Ording 00:28:29]. Promotion and distribution by Greg [Straface 00:28:31]. Our Creative Director is [Aaron De Silva 00:28:35]. Our Executive Producer is Phil Johnson for PJA Adverting and Marketing. I’m [Jafia Leihi 00:28:40]. To hear more episodes of The Unconventionals, visit PJARadio.com.

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