The New Face of Entrepreneurship
Neil Blumenthal, WG’10 Dave Gilboa, WG’10, GEN’10 Founders and co-CEOs of Warby Parker
Neil Blumenthal, WG’10, Dave Gilboa, WG’10, Andy Hunt, WG’10, and Jeff Raider, WG’10, sought out Wharton to do something entrepreneurial and to create a positive impact on the world. At school, they quickly discovered each other, and conceived Warby Parker. You’ve probably heard of, and even purchased their designed prescription eyewear online or at one of their three Manhattan stores. You may not know the story how they set out to transform the optical industry, do good, and have fun. Through Warby Parker’s Buy a Pair Give a Pair program, 500,000 pairs of glasses have been distributed through low-income entrepreneurs. Co-CEOs Neil and Dave, explain in this interview how they methodically planned (almost) every aspect of their company prelaunch and hit the ground running.
What’s your background, Dave?
I grew up thinking I would be a doctor. Both my parents were doctors. I attended UC Berkeley as a bioengineering major, took the MCAT and was set to attend med school. Then managed care began taking over the healthcare industry, and it did not look rewarding to be a practicing physician. I thought that leading an organization that did something good in the world would be another way to help people, even on a larger scale. I joined Bain & Company and became a management consultant for three years. Then I moved to New York City and worked in finance at a small firm called Allen & Company. After a couple of years, with the thought of either joining an early-stage company, or helping to create something — I decided to attend graduate school at Wharton.
How did you four come together to create Warby Parker?
Before I entered school, I was backpacking around Southeast Asia and lost my glasses. They were Prada glasses that cost me $700. Being a full-time student, I could not justify buying a new pair, and went without them during my first semester at school, complaining to my friends about how expensive glasses were. At the same time, my friend Andy, who was on my learning team, experienced the same frustration — he and his girlfriend bought everything online, and wondered why nobody sold glasses there. Jeff became interested in the conversation. And Neil had spent five years running an eyewear nonprofit called VisionSpring. He had visited manufacturers all over the world, and he knew that there was no reason that glasses had to be as expensive as they were. We started talking about this idea at the computer lab at school, and over a few drinks at our favorite bar Roosevelt’s, we started hashing out the foundation of what became Warby Parker. We entered the Wharton Business Plan Competition.
Did you win the competition?
We didn’t even make it to the finals, which frustrated us at the time, but it also allowed us to focus on the launch rather than optimizing the plan for the next stage of the competition. The more we learned about the industry, the opportunity and consumers’ frustration of overpaying for glasses, the more excited we were to start.
So, Warby Parker had an online launch?
Exactly. We launched in February 2010, our last semester at school. We invested our life savings as starting capital on three things — not on our salary, not on employees and not on an office. We invested, first, in getting a website up, because none of us were technical. Second, we invested in our initial set of inventory since we had to pay for it before we knew we could sell it. And third, we hired in a fashion public relations firm. We recognized that we were trying to be disruptive — to sell eyewear online, when no one was doing that effectively, and to sell at a fraction of the price by innovating on the supply chain — but those things were replicable. Creating a brand that was credible in the fashion world, that resonated with consumers, would be defensible. We needed a stamp of approval deep in the fashion industry, so we placed features in GQ and Vogue, hoping they would benefit the brand. We didn’t expect them to drive a lot of sales, so we were blown away by the website traffic they generated. During the first 24 hours of our launch, orders surpassed inventory. We did not have a sold-out function built into the website, so we held an emergency meeting to decide, “Do we take down the website, or do we take orders and apologize?” In those 10 minutes, we received another 12 orders. We frantically called our developer, and he built waitlist functionality onto the website. We signed up thousands of customers, reaching our sales target for the first year in the first three weeks. Our brothers, sisters, wives, girlfriends, anyone who had a free hour, helped us to pack boxes and receive orders. We stayed up all night, and customer service calls were routed directly to our mobile phones — it was a crazy and exhilarating few weeks. No matter how painful things were for us internally — we wanted to make sure to prioritize the customer experience, and make sure that those initial customers came away with a good impression of the brand.
Many firms use public relations and are featured in premier fashion magazines. What was the difference here?
If you talk to people in the startup world today, they’ll talk about the lean startup methodology of getting a minimal viable product out there, learning what customers want and iterating. We took the opposite approach, where we wanted to have a very polished thought-out story, design and brand from the day we launched. I think that’s important in the fashion industry, where you can’t put out a half-baked idea, wait to get customer feedback and then iterate on that. We wanted to have a point of view on style, design, what our brand stood for — from the fashion elements to the design of the website — to the social mission behind our brand, to how we communicated with our customers. We spent 18 months putting a ton of thought into every aspect of the business. These details in combination gave a cohesive brand story that resonated with people. We wanted our Warby Parker brand to lead with the fashion element. We felt that it didn’t matter how affordable our glasses were, that we had free try-ons, or how good people felt about their purchase because of the social mission. If our glasses didn’t look good, and if people didn’t think it was a great fashion brand, then they wouldn’t wear our glasses.
Was there a debate among you about starting sooner versus taking the time to perfect Warby Parker?
No. We each recognized that we wanted to be very polished. As an example, we took six months to decide on a name. We still have a spreadsheet that shows over 2,000 names that we texted back and forth. We focused on every detail to make sure we felt great about the name of each individual frame and the logo. We just didn’t want to have to put a product out there that we weren’t proud of. That same attitude continues to be built into the DNA of the company. For example, we started publishing the Warby Parker annual report. It was just a way for us to share some insights about the company with our customers. We weren’t expecting it to go viral. Some of our highest sales dates ever surrounded the release of those annual reports. We found that, the more we shared, the more customers wanted to share about our company — it ends up being an interesting viral loop.
How did your brick-and-mortar stores start?
People called and asked, “We saw on your website that you’re sold out — can we come to your office and try them on?” We said, “OK, but our office is our apartment!” We just invited people over and laid out the glasses on the dining room table. Customers loved the experience, the feeling that they were discovering something before anyone else. Every person who came to our apartment ended up buying at least one pair. So when we moved to New York City, we dedicated part of our office as a showroom. Later, we replicated that showroom experience in 15 boutiques around the country. We’ve also done pop-up shops over the holidays. And then there is the Warby Parker Class Trip, a refurbished old yellow school bus that tours the country. We find a part of town where we think our customers shop and set up a mobile shop there for a few weeks. More recently, we’ve opened three retail stores in Manhattan at 121 Greene Street, 819 Washington Street, and 1209 Lexington Avenue. None of these things were built into our business plan, but they have worked well. The majority of sales are still done online, but we find that having a physical presence enhances our brand. Customers buy their first pair in a store, and future pairs online.
What was it like having four founders?
People advised us to not start a company with four founders. It is way too many people — you’re splitting your equity four ways. Also, they suggested not starting a company with friends. We took their advice and ignored it! We just tried to be very thoughtful and not let issues develop between us. For example, we set up monthly 360-degree feedback sessions — where we would not talk about business — purely interpersonal feedback. “When you send me a multi-paragraph email at 4 in the morning, giving me advice on things I’m working on, that I had no chance to update you on, it is frustrating that you’re not trusting that I’m already thinking about these things.” It helped prevent issues building up below the surface, to give feedback to each other in a way that everyone felt comfortable with. Having four of us early on slowed us down, but it forced us to be thoughtful about every aspect of the business. We all trusted each other in that we were all hardworking, had great thoughts about the direction of the brand, were smart and valued each other. If it had been two or three of us, we would have missed out on
certain elements that created magic early on.
What made the Warby Parker team so effective through those initial stages?
When we had this initial conversation at the computer lab, Dave had just lost a pair of glasses in Thailand. Jeff had also lost his glasses but was hesitant to replace them now that he was a student. Andy had a great idea to sell glasses online. I knew there was a big disconnect between the cost of manufacturing and the price they sold for. The light bulb went off for the four of us. We went home that night, and the next day, we all sought each other out — none of us could sleep. That evening, we went to a bar and looked each other in the eye to say, “Hey, are we going to do this?” We promised two things. First, we would bust our butts and work harder than ever before — not that we hadn’t worked 20 hours a day at some previous job, but we knew that this would be different. Second, we would remain friends throughout the process. This was no small task, because people far smarter than we are have made the same promise, but quickly became enemies. We implemented systems that did allow us to remain friends. First, we decided that we would be equal partners — we each put the same amount of money into the business, so we all had equal equity. We then created a vesting schedule from when we started until graduation, with monthly vesting, so anyone could leave the company without feeling guilty and without anyone else feeling resentful. As it turned out, we were so excited about the opportunity that nobody did leave before graduation, but having that escape valve helped. To some extent, we were living parallel lives — going to school, enjoying the advantages of attending Wharton and then applying every single lesson we learned that day to the business later that evening.
How was it starting a company at Wharton?
The support we received at Wharton was essential to our success. Professor Raju, the head of the marketing department, and a pricing expert, met with us. We had made this beautiful PowerPoint presentation, and prefaced it by explaining that we were building a company that would to sell $500 pairs of glasses for $45.00. He didn’t even look at our deck. He told us, “It’s outside the realm of believability.” He helped us to figure out how to price the glasses, which was critical. Professor David Bell became one of our investors. He helped us put together different conjoint surveys that allowed us to test different elements of our offering — from branding, to marketing message, to price points — before we launched. So we could get a lot of feedback without exposing the brand. Our classmates helped us in multiple ways. We surveyed them. They joined our focus groups. If we had a question about search engine optimization (SEO), we spoke to someone who had done SEO work the past five years. If we had marketing questions, we could ask someone who worked at Coca-Cola.
What else did Warby Parker have going for it?
Goodwill. The four of us, through the first 20 or so years of our lives, had become surrounded with people who were so supportive and so willing to help. Parents, aunts and uncles, friends from high school — it was remarkable. The fact that we were building an organization designed to be transformative — to demonstrate that companies can be profitable and can do good in the world, without charging a premium for it — that is a powerful idea, and a lot of people supported that notion, and had goodwill toward us. There was serendipity in that our networks were exactly aligned with our customers. The best businesses solve real problems. The best way to identify those problems is usually when they affect you.
What kind of collaborations has Warby Parker taken on?
Warby Parker created a sunglasses collaboration with the designer Suno, among others. We also collaborate with leaders in the hospitality industry. We established 1950s-inspired newsstands in Standard Hotel lobbies, called The Readery, where you can buy our glasses and sunglasses, plus reading material. Also, if you take the StndAIR seaplane, which flies from the Hudson River to Shelter Island, you can choose a pair of Warby Parker sunglasses with a copy of CliffsNotes of great American novels.
Where does Warby Parker go from here?
We want to build the next great lifestyle brand, and to continue doing good while being profitable. To do that we need to scale. Right now, we want as many people to know about us as humanly possible.