Andrew: Hey, everyone. My name is Andrew Warner. I’m the founder of Mixergy.com, the place where I’ve done interviews with over a thousand entrepreneurs.
My goal is to hear the story of how they built their businesses so that you, you my listener, will continue to build your business not so much based on how they’ve done it, but with the knowledge that comes from understanding their stories. And my vision is that you listen to these interviews, build great companies and then you come back here and do an interview yourself to talk about how you did it.
Well, long before I did all this, I lived in New York, where I grew up. I remember going to Austin Street in Queens to buy glasses back when I wore glasses. I thought that by going into the local store and picking out the different brands and shelling out hundreds of dollars, which frankly for me, I was a high school and then college student doing this, actually a college student, that was a lot of money.
I thought that I was actually picking the company I liked the best. It turns out I was wrong. It turns out it was company that not only made all the glasses in the store but actually owned the store and probably the insurance company I had at the time, though I don’t remember the brand of insurance my parents had.
Well, today’s guest noticed that too and said, “Hey, there’s probably a better way. We don’t have to have this one monolith. We could create our own brand, our own interaction with customers, actually charge less and have glasses that are cooler and available to be bought online.” By doing that, he build what is considered a unicorn, one of these highly valued companies. I invited him here to talk about how he did it.
His name is Neil Blumenthal. He is the cofounder of Warby Parker. It’s a vertically integrated lifestyle brand that’s working to transform the optical industry. This interview is sponsored by two companies. I’ll tell you more about them later. The first is Toptal, which will help you find a great developer. The next will help you find a great design. It’s called DesignCrowd.
Neil, welcome.
Neil: Thanks for having me.
Andrew: I understand that you guys are a unicorn, meaning you’re worth more than $1 billion. What is the valuation at the latest raise?
Neil: We generally don’t speak about valuations or revenue per se publicly. It has been reported that our last round we were valued at $1.2 billion and that was almost two years ago.
Andrew: And the company is how old now?
Neil: We’re about to celebrate our seventh birthday.
Andrew: Seventh birthday. That is fantastic growth in such a short period of time. I love that you’re still happy to share the story because I want to get the fundamentals of the story in and then I’ve got to dig in deeper with some of the research that I’ve done about you. The fundamental part of this story at the beginning is you met your three cofounders where?
Neil: At business school, at Wharton. We were all full-time MBA students.
Andrew: Why did you go get an MBA? You’re a guy with a lot of experience. You see the startup world. You know, as you’ve told other people, MBAs aren’t that valued in the startup world. Why do that?
Neil: For me, I had been working in the nonprofit sector and I was running a nonprofit called VisionSpring that would train low income women in the developing world to start their own businesses, giving eye exams and selling glasses. Even though I had done this for over five years, I had opened up programs in ten different countries, including an office in Hyderabad, which is one of the global tech centers. I had been to China and worked on manufacturing. I had built a global supply chain. Because of my nonprofit background, I felt like I didn’t have the credibility that I needed to transition to the for profit sector.
Andrew: I see.
Neil: Business school is a great opportunity if people want to switch careers and start something new. You get this stamp of approval, particularly from a place like Wharton, which is just known for being expert in finance and operations. I think the dirty little secret about Wharton is they also are great around preparing leaders, around management. It’s got the most published marketing department out there. You see a lot of value-based companies come out of Wharton like Warby Parker. So it was a perfect fit for me.
Andrew: So what’s the impetus that got you to launch Warby Parker?
Neil: Literally trying to solve our own problems. So I started Warby Parker with three friends, Jeff Raider, Andy Hunt and Dave Gilboa. We happened to be talking about glasses. We were doing so in the computer lab in Huntsman Hall at Wharton. Dave was complaining that he just lost a $700 pair of glasses. He left it in the seat pocket of an airplane because he was traveling right before school started. He had worked at a bank so he could afford a $700 pair of glasses. Andy had a similar story, Jeff had a similar story.
Andy posited the question, “Why isn’t anybody selling glasses online?” because we had all seen ecommerce just explode, in particular for categories that you never thought could work online, like Zappos selling shoes and Blue Nile selling engagement rings. And I think we take that all for granted, but eight years ago, before we launched Warby Parker, nobody thought you could sell glasses online. But for us, the light bulbs started to go off.
Of course, that conversation was cut short because we had to run to class, but then later that evening–you know when you have a feeling and it’s in the gut of your stomach and you can’t sleep? It was one of those nights. At 2:00 in the morning, I emailed Jeff, Andy and Dave and at 2:01, Dave responded and at 2:02, Jeff responded and then Andy responded and we were all up just thinking about this idea.
Andrew: So you said that no one had been selling glasses online, but the nonprofit that you guys support sprung out of–is the name Scojo?
Neil: Yes, exactly, Scojo.
Andrew: Scojo sells glasses online now, and as far as I can tell, they were selling it even before you guys were. I guess they were reading glasses. It wasn’t anything beyond that, right?
Neil: It was reading glasses, and it was primarily sold through drugstores and department stores. So Scojo was started by Dr. Jordan Kassalow and Scott Berrie. The name actually comes from their two names.
Andrew: Oh, that’s where it came from. Okay.
Neil: And they sort of thought, “Wow, there’s this hole in the market where you can buy either really cheap reading glasses at a gas station for a couple dollars, or you have to go buy prescription glasses that could be several hundred dollars. What if we created well designed reading glasses and sold them maybe for $45 but would be almost to the quality of a prescription pair of glasses?” It was a really innovative idea. They’ve since sold Scojo to a larger company, but if you want reading glasses, it’s a great option.
Andrew: How much of that was an inspiration for Warby Parker, that, “If these guys could take something and put it online a little bit but also add a lot of design to it and turn it into a brand then maybe we can?”
Neil: I think there were some learnings there. I think one was not to separate the mission from the commercial aspect too much, which I think they did. I think the other lesson was that I never want to be in the wholesale business and dependent on other retailers for the growth of your business and depend on them for margins.
Andrew: Why not?
Neil: I think for a few reasons. One is that buyers can be fickle. You could be doing big business through one of these retailers and then at a drop of a dime, they could drop you. Suddenly you see a big hole in your business. I think the second thing is you don’t have a direct line to your customers.
So the feedback you’re getting is often through these other retailers. If you want to make great product, if you want to create awesome services, you need to be interacting directly with customers and getting feedback so that way you can change attributes of your product, improve it. You can be providing great customer service. You don’t have control over the brand if you’re wholesaling to a third party which is then selling it to somebody else.
Andrew: Okay. What I wonder every time I read your story is I see four cofounders, which seems more than most tech companies have. I always wonder why didn’t you, Neil, say, “You know what? David, Jeffrey and Andrew are really smart guys. I’ll pick one of them and we’ll become cofounders and the other two will help us get going but they’re not going to be full cofounders.” Why did you want all three?
Neil: You know, this idea was really born out of conversations the four of us had. Even though this is probably not the A-team that you would have created.
Andrew: It feels like it.
Neil: Yeah, I think the results speak for themselves, but if you look at our backgrounds, you’ve got me as the nonprofit international development guy.
Andrew: Yeah.
Neil: Now, of course, I had some background in the optical industry, so it’s related. I think that was helpful. Dave had worked at Bain & Company as a management consultant and then at Allen & Company as an investment banker. Andy had been a banker. Jeff had been a consultant at Bain & Company as well and then was working in private equity at Charles Bank.
So there were definitely some overlapping skill sets. You didn’t have your technology expert and software engineer. You didn’t have a manufacturing expert. You didn’t have a retail and branding expert. I think what you did have was people that recognize a problem, had an idea of a solution and then were just relentless in learning as much as possible to create a new way.
Now, we were full-time students at Wharton, as I mentioned, so we had some time to really dedicate to this. It wasn’t like we had full-time jobs. So we had an opportunity to think through what was our strategy. Then we had an opportunity to stress test that with friends, with professors.
We had an opportunity to stress test that with friends, with professors. We had an opportunity to just learn as much as possible about these areas of the business that we wouldn’t be expert in, and we knew sort of once we graduated that maybe this business will be successful. Maybe it won’t be, but to have four of us sort of running it as co-chief executives probably wouldn’t work.
Jeff had committed to go back to the private equity fund that he was working at before school. They were paying for school, so it was never an option for him to continue beyond graduation. He’s since gone on–he went back to Charles Bank for two years then has since started Harry’s, the razor company, that’s sort of like a sister company that’s trying to take on the razor industry and charges half of what Gillette charges.
Andrew: And also is a designed based company like Warby Parker.
Neil: Exactly.
Andrew: I see. I’m sorry. Go ahead.
Neil: I was going to say Andy was more passionate about investing. He went into venture capital. Dave and I were excited to sort of run and grow the business. So we continued to run it as co-CEOs.
Andrew: So I’ve been doing a lot of these interviews and hearing entrepreneurs say, “I found a problem and then I built a business.” A lot of times the next step was to make sure the problem they found wasn’t one they only experienced so that they’re not just solving their own personal problems, but they’re understanding there is a bigger problem here. “Here’s how the rest of the world experiences it. It’s a shade different than mine, but that is a meaningful shade.” Did you do any of that to understand that there were other people who were losing their glasses or were upset about the price?
Neil: Absolutely.
Andrew: How did you do it?
Neil: We did it a few different ways. One is that we would just ask people in a very anecdotal way. The other is given a few of us have been management consultants, we put together surveys and we would harass our classmates. We have 800 classmates at Wharton, and we got a bunch of surveys from us asking, “Hey, how frequently do you buy glasses? How much did you pay for your last pair? What brand did you buy? Are you happy?”
We did a lot of research on the industry and found that there was one very large company named Luxottica that’s about a $25 billion market cap that owns Oakley, Ray-Ban, Persol, Arnette, Oliver Peoples, a bunch of other brands. They license pretty much all the brands out there like Ralph Lauren, Chanel, Dolce & Gabbana, Prada. They also own a lot of the retail chains that most people shop at like LensCrafters, Pearle Vision, Sunglass Hut, Sears Optical, Target Optical. And they own EyeMed, the second largest vision insurance plan in the country.
So, when we saw this dynamic, the light bulb went off and it was like, “Huh, there are incentives to keeping glasses expensive.” The market was big. It was over $100 billion globally. So we started checking all these boxes of, “This is an interesting opportunity with a widespread sort of problem.”
Andrew: What was the problem as other people expressed it? I understand that price is an issue, that of course when your cofounder loses a $700 pair of glasses it’s painful, but as one of your professors, I think, said to you, actually price is how people value the brand, that if you charge more, people value it more. So maybe it didn’t hurt these companies that they were very expensive. How did you understand that price was a problem for people, there were pain points to shopping in a store as opposed to doing it online? Can you tell me a little bit more of the feedback you got that told you, “Yes, we really are finding a clear problem here?”
Neil: Yeah. I think the big thing was that price was an issue. It wasn’t like people were screaming from the mountain tops, “Hey, glasses are so expensive,” but when you asked people, “How much did you pay?” They would sort of say, “Oh man, $400,” or, “Oh man, $300,” or, “Oh man, $500.” So it wasn’t something like they necessarily always felt ripped off, but they sure didn’t want to talk about it. As they reflected upon it, they were like, “Yeah, that was expensive. I don’t understand why glasses cost as much as an iPhone.”
Andrew: I see. More actually at the time.
Neil: Exactly.
Andrew: I see. You know what? There are some times that if I ask someone how much they paid for it, they’re kind of proud that they paid a lot for it, that they got the top of the line most expensive because it means it’s more out of reach for other people so it’s more special. I see. You’re not just looking at their survey results. You’re also looking at their body language and the words and the expressions they use to describe that price and you’re picking up on frustration with the price.
What about online shopping? I really think that as I was going through Quora questions, the whole idea of online shopping even to this day for glasses is scary to people. Did you pick up on anything that said people don’t want to go to stores, just like they don’t want to go to stores to buy shoes? How did you pick up on that?
Neil: Nobody wanted to shop online. So I don’t think we were solving for a problem that nobody was buying glasses online before us. It was more it was this whitespace and this opportunity. In fact, our customer research showed that people didn’t want to buy glasses online, and that gave us a lot of pause and forced us to rethink this idea of launching a business online to sell a product that people wanted to touch and feel, that they wanted to try on and look in the mirror with.
So all these entrepreneurial journeys are like emotional roller coasters. One minute, you feel super smart and the next minute you feel like you’re the biggest idiot on the planet. We were in this trough where we were like, “We don’t know if anyone wants to buy glasses online because they want to touch and feel them.”
It was sort of being in those doldrums of uncertainty that led us to this idea of a home try on program, where customers could go online, select five pairs of glasses, we’ll ship it to them for free. They have five days to try it on at home. That idea gave us the confidence to invest more time and money into the Warby Parker concept. Eventually when we launched, it was a big part of our success. GQ called us the Netflix of eyewear.
Andrew: Because you were sending so many glasses to your customers’ home the way Netflix used to with DVDs.
Neil: Exactly.
Andrew: I see.
Neil: The other thing that the home try on problem solved was potentially a high return rate, which would have destroyed the economics of the business. So, when somebody returns a pair of glasses, you actually have to throw out the lenses because it’s almost statistically impossible that somebody has the same prescription in each eye, has the same pupillary distance, the measure between your two pupils and wants the same frame.
So, if we had return rates like Zappos does, then the business just wouldn’t work because we would have been spending so much on lenses that got thrown out. So the thought is that this home try on program not only eliminates that friction point of people not wanting to buy online because they want to touch and feel the glasses and try them on, but it also hopefully reduces the return rate and makes this a viable business.
Andrew: I see. Okay. If I’m understanding you right, you found your own problem, you said, “Look, there are other people who would clearly experience this problem. It’s too expensive.” You also said, “We need to go online because there’s whitespace. There’s nobody really doing this right online.”
You knew because you talked to people that online was a pain for them and you said, “We have to solve this pain that we’re about to inflict on our customers and you came up with the way that actually ended up delighting them. They get to try the glasses on at home.” Not only did you overcome the pain, but you created this positive experience for them. Am I right?
Neil: Exactly. You know, I think we saw ecommerce not so much that we believe in ecommerce above all other forms of selling, but because it was the fastest, least expensive way for us to build a direct relationship with our customers. Why that’s important is that the reason we’re able to provide a $500 pair of glasses for $95 is because we cut out the middle man and we don’t wholesale and we sell direct to the customers. So, for us to start, we were either going to have to open up stores right away or build a website. It was cheaper to build a website.
Andrew: So the company that I mentioned earlier, Scojo, Scojo built their site as far as I can tell on Magento. They didn’t have experience building ecommerce sites. They just used a framework that was available and free. You guys seemed to, despite not having a technical cofounder, you seem to have built the whole thing yourselves from scratch and I’m wondering who built it for you?
Neil: So one of the things that we did was sort of sketch out and wireframe the website before we hired anybody to build it. So, given the management consulting and banking background of our four-person team, if there was one thing we could do, it was create nice decks in PowerPoint. This was a moment again, 2008, 2009, we launched in 2010 where desktop ecommerce was king.
So a slide on PowerPoint kind of looks like the screen on the desktop. So we would literally map out what each webpage would look like on PowerPoint. We would then print that out and do sort of physical user testing with our friends to say, “Hey, this is the homepage. What button would you press?” Oh, that takes you to the gallery page. That takes you to the product page.
And what this enabled us to do was having a really tight scope in which we could go to vendors and say, “Hey, how much would it cost to build this?” This was just true for any sort of vendor/customer relationship. Vendors will charge you more if there’s uncertainty. So the more that you can be specific with what you want, the better deal you’re going to get. We went to four different dev shops to get quotes on, “Hey, please build our website.”
One of them came at half the price of the other three. So we said, “Great, let’s go with these guys.” This was lesson number one. Don’t always go with the cheapest vendor. Literally within six months, we had to fire this vendor. All the code they had written was terrible. We had to find a new one and that set us back and delayed the launch by a few months.
Andrew: I see. All right. Let me take a moment here. Actually, this kind of ties into my first sponsor, which is a company called Toptal. They take what you just said to heart. Their goal is to hire not the cheapest developers but the best developers they can. Neil, these guys pride themselves on having a test for each developer that screens out and shows the door to 97% of the people that want to work on Toptal. The top 3% are available in a network. Anyone who’s looking to hire a developer can go to Toptal and hire from them. Are you clicking over to Toptal’s website?
Neil: No. I was trying to–I accidentally moved you to the side.
Andrew: Oh got it. Okay. I thought maybe there was some bug or an issue. So I actually had this guy in my office yesterday, a guy named Eric Brown. He showed me his software. He said, “Andrew, I know that you’re trying to reconfigure your business. Here, let me show you this software I built to help you think through your business and teach your team how to run it.”
I said, “This is beautiful. This is, what, a beta?” He goes, “Yeah, I’m not ready to show it to the world.” I said, “Eric, how’d you build this thing?” He goes, “I didn’t. I heard your ad about Toptal. I hired Toptal. They built this thing. It looks really great and I still have visions for how to improve it.”
So that’s the goal behind Toptal. You go to them with your engineering need, tell them what you’re working on, how your team work or maybe it’s just like Eric, you’re just a single person working on it by yourself. They find the best developers for you or single developer. They match you up. If it’s a good fit, you can often start within a day or two and if you’re happy, you can continue working with them full-time, part-time, project basis, etc.
If you’re out there and you’re listening to me, Toptal was created by a Mixergy fan who went on to greatness, raised money from Andreessen Horowitz and because they started out–actually, the two fans who built up Toptal–because they want on to greatness and they want to give back to the Mixergy community and frankly to help me and I appreciate it, they’re giving my audience 80 hours of Toptal developer credit when you pay for your first 80 hours. That’s in addition to a no risk trial period of up to two weeks.
If you’re listening to me and you want the best of the best developers, Toptal is the place to go and a special URL they created for us is where you get this 80 hours of developer credit. Just go to Toptal.com/Mixergy, top as in top of the heap, tal as in talent, Toptal.com/Mixergy.
Neil, the thing that I always admired and was intimidated by you is your design and your brand. I’m actually like looking at you now–don’t take this negatively–I’m looking at you, you’re wearing a blue button down with the collar buttoned down. You look like an MBA student. You don’t look like a tattooed bearded guy that I would be intimidated to order a cup of coffee next to because you’d have a cooler cup of coffee than mine. Where did this design come from? Where did the designs of the first glasses come from?
Neil: Does it help that it’s an APC button down?
Andrew: What’s an APC? I don’t even know that, actually. It does help.
Neil: It’s a brand. My aesthetic and I dress in a very simple, classic way. I’m certainly by no means a classically trained designer, never went to fashion school. I did grow up in Manhattan and Downtown and Greenwich Village. I do think that there’s something to being in the city that just exposes you to a bunch of different industries, that exposes you to culture. If you wanted, you could create a certain taste level.
So, when I think about the people that have built great brands, I don’t know if it’s necessary all the formal training they’ve received versus just having a particular point of view and a taste level. The four of us had a very specific point of view of what type of brand we wanted to create.
Andrew: A shared point of view.
Neil: It was about building something that stood for fun creativity and doing good in the world. So, as we started to build out literally the brand architecture, we kept coming back to writers because of the link between vision and learning and reading and the fact that writers are often on the vanguard of social change and certainly of education.
Andrew: That explains why I’m looking at snapshots of the early version of your site. There is a pair of glasses called the Huxley, another one called the Sinclair, Beckett is a third one and it goes on from there. That’s the inspiration for the name and through that, you’re communicating your brand’s message. Am I right?
Neil: Exactly. Those early days, we didn’t hire an ad agency or a branding agency, but we sort of did a lot of the exercises that these brand agencies tend to do, which is sort of articulating what our values are, what we stand for, doing an exercise like if you were a car, what would you be? If you were a pair of jeans, what would you be?
Andrew: Meaning what kind of jeans, bell bottoms or skinny jeans, that kind of thing?
Neil: You could interpret it however you want. If you were a Rolling Stone, who would you be? So, for our perspective, we called ourselves from a car that we would be like a Presla, which would be in between Prius and Tesla.
Andrew: Got it.
Neil: Again, this was seven years ago. But the thought there is that hey, we’re environmentally aware and thoughtful. We’re innovative. We’re not to showy as well. So getting into those nuances make a big difference. We’ve thought about the brand as being somewhat collegiate and I think that’s very different than being preppy, right? And those nuances of the words and the meanings behind it and how people interpret it are what create a point of view.
Andrew: I see. The actual glasses themselves were designed by the four of you from what I understand based on glasses you’d admired that you’d found over the years based on this personality you had. Is it true also that it was glasses you found at your grandparents’ houses?
Neil: Yeah. Our first monocle–
Andrew: Yeah, the first website had a monocle on it. The links at the top are men, women, buy a pair, give a pair, which tells me a lot about what you stood for, that took the most prominent link at the top, our story, which is helpful for me when I’m preparing, monocle and then help, frequently asked questions. I didn’t realize you had a monocle day one. Why?
Neil: We thought it would be fun. Again, you’re building a brand centered around fun, creativity and doing good in the world. How do you bring that to life? We were joking around one day about, “How come nobody wears a monocle anymore?” So we decided to sell it for the exact reason of, “Who sells a monocle?” So we call it The Colonel after the board game Clue.
For us it’s fun. It’s certainly not a big money earner. We actually find that some chefs buy monocles because when they’re in the kitchen, sometimes their glasses fog up, so it helps to have a monocle that they can throw in and out of their pockets.
Andrew: Interesting. You mentioned you were sitting around and you came up with this idea and said, “No one wears monocles anymore,” and then you came up with a need to create this as a way of expressing your brand. I asked Alexis O’Hanion years ago about how he comes up with ideas when he speaks at conferences and to be honest, he said, “I smoke a lot of weed and talk with my friends.” I imagine that’s not your process. What is your process and what was it in the early days for being this creative?
Neil: I think creativity is born out of constraints. So I think that idea of people sitting around thinking blue sky ideas and suddenly they come up with something is BS and anybody that tells you they sit around and smoke weed, I just don’t believe that. I don’t see that that happens. What happens is that you’re faced with a problem and you start to think, “Why is the world this way? Why does this particular situation exist? What would be a better way?”
When people are often asking me, “Hey, I want to start a company. How do I do it?” The answer is write down five frustrations every day. By the end of the week, you’ll have over 30. By the end of the week, you’ll have over 100. And then start to think about, “Do any of these frustrations have solutions that could be a business opportunity?” That’s sort of where I see creativity and innovation comes from.
Andrew: Interesting. Five frustrations a day, not five ideas for a business, but five things that bother you or the people around you and see which ones of those could end up being businesses.
Neil: Yeah. And then we continue to do that as we grow the business. So we’ve now started to open up stores. We almost had 50 stores. We never envisioned opening up stores.
Andrew: I learned–sorry to interrupt you, but I’m glad you’re bringing this up. I went back and listened to early interviews and read early interviews of yours and you guys seemed to be combating the actual store experience and then when you created a store, I couldn’t understand it. So what’s the relationship to frustration and the stores?
Neil: So, if you’ve ever gone and bought a pair of glasses, you likely walked into a store, the frames are in a glass display or behind a counter out of reach. You have to engage with somebody who is like passing them the glasses telling you whether you look good or not. You don’t know whether you trust the person’s opinion. It’s not an optimal shopping experience. When I go and you’re sometimes looking at a mirror that’s a vanity mirror that you can only see your face in. There’s an example of a frustration.
When you walk into an optical shop, it’s like, “I want to touch the glasses myself. I want to throw them on. If I look silly, I’m going to laugh at myself, but I’m happy to do that. I don’t necessarily want a bunch of other people seeing that and laughing at me. So, when we were designing our stores, it was like, “Let’s have shelves. Let’s make them eye level so they’re easy to see, not where you have to bend down to a glass display, that you can actually pick them up off the shelf, that there are full-length mirrors.”
These all seem like really basic design ideas and simple functionality, but it’s not being done by the industry today and it took an outsider to look at this and to identify even a frustration to come up with a solution.
Andrew: My understanding was that you guys didn’t have this idea that you need to have stores. It was that people kept saying, “Hey, I’m in the Bay Area. You’re in the Bay Area. Can I pop into your office to try on these glasses?” Am I right?
Neil: Exactly. What happened is that when we launched in February, 2010, we were featured in Vogue and GQ and the company took off like a rocket ship. We hit out our first year sales targets in three weeks, sold out of our top 15 styles in four weeks. But what happened is within 48 hours, we had to temporarily suspend the home try on program because we ran out of inventory. We had shipped out all of our frames to customers.
Since we were full-time students at Wharton, people sort of called up and said, “We hear you’re in Philadelphia. Can we come by your office to try on glasses?” We’re like, “We’re working out of our apartment. If you want to come by, come by.” We experimented. We invited five people to my apartment. We put the glasses on the dining room table. We had people check out on a laptop using the website and that was our first foray into brick and mortar retail.
Andrew: I run in the Bay Area and every once in a while I see a yellow bus–or I guess I used to, I don’t see it anymore–a yellow bus with Warby Parker on it. I always wondered what that is. Is that like your shuttle the equivalent of the Google shuttle or is this something else? What is that?
Neil: What we did was our journey into retail started in my apartment, then when we opened our first office in Manhattan, we dedicated a portion of it to be a showroom where people could come in and shop and see the people working behind the brand. And then we had this idea of almost like a cross-country tour and what if we bought a bus or a truck, turned it into a store and went to different cities and told people the Warby Parker story?
Andrew: I see.
Neil: So we bought an old yellow school bus, which are surprisingly inexpensive because school districts have to retire them pretty early based on state law. We ripped out the seats. We re-did the interior, put oak shelving in and made it a beautiful mobile store. We sold things like sweatshirt sand mugs, the Warby Parker class trip. If you were one of the kids that hung out in the back of the bus, we also sold flasks. We went to over 15 cities. Each city, we would be in three locations each. It was really a marketing activity to raise awareness.
What it ended up doing is creating a road map of where we should open up stores. Suddenly we had data from all these different locations of where do we sell best. And on M and Wisconsin in Georgetown in DC, we sold a lot of glasses. So now we have a store on M and Wisconsin in DC.
Andrew: I see. It wasn’t about sales, it was about marketing, which I learned in business school are different. Sales, you actually want people to buy, marketing is the bigger picture. I don’t actually remember how they described it, right? You just said, “We want the brand out there. If we get sales, it’s a bonus.” Through this, you got a lot of learning that allowed you to create stories, am I right?
Neil: Yes. But we always want to have our cake and eat it too. So, while it was a brand awareness activity, we wanted to sort of have it be as efficient and cost effective as possible. So, we absolutely sold out of the bus and that helped to fray the cost quite a bit.
Andrew: I see.
Neil: But you’re right, from a priority number one, it was about introducing the brand in a brand appropriate way to as many people as possible.
Andrew: Paul Graham, one of the early Mixergy interviewees and a guy who’s help me a lot at Mixergy says that there’s schlep blindness, that when there’s pain, people have so become adjusted and used to it that they’re blind to it. When you mentioned glasses at a store, I realized yeah, I always hate when the person at the store watches me put on glasses, but I just never thought about it.
I took it for granted that of course they’re going to want to keep an eye on their glasses and I’m the fool for not being helped because I don’t know how to talk to them. How did you break through that kind of blindness to pain to understand, “Glasses shouldn’t be low, let people grab them and try them on themselves?” What allowed you to understand there were these pains you could then solve?
Neil: I think once we started zeroing in on we want to make buying glasses as fun, as easy, as convenient and as inexpensive as possible, the world was our oyster and we saw every single problem was out there in the way glasses were being sold. Even to this day, we even walk into our own stores and say, “Hey, this is not ideal. What do we have to do to make it ideal?”
Andrew: I see. One of my past interviews, Dane Maxwell–I think I’m getting this a little wrong, but I think I got the main gist of it right–he says when you wear green glasses, you start to notice green everywhere, that when you start to look for problems and really are sensitized to it, you start to see problems everywhere where the rest of the world would ignore it, am I right?
Neil: That’s exactly right.
Andrew: There’s something that sticks with me. Again, I admire your brand so much. Maybe we can about how in the early days you were so good at PR. That’s how you did some fundraising, by doing PR for someone else and helping them with their brand, but you mentioned a bunch of techniques like, “What car would you be? What jeans would you be?” Is there a book on that or some resource we can use as a follow up to this conversation that I can go and look at and learn from?
Neil: I don’t think that there is. I’ll have to give that some thought. It’s not immediately coming to mind. When I was working in the nonprofit sector, Scojo Foundation, we rebranded as VisionSpring and we went through that process.
Andrew: I see.
Neil: It was that process that I literally mimicked when we were building Warby Parker.
Andrew: All right. I’ll talk about my second and final sponsor. It’s a company called DesignCrowd. Neil, as you notice, I’m so intimidated by design that frankly for me the fact that I’m wearing these beads is like, “Look, I’m wearing something that’s not functional that actually have a look to it and a feel to it,” but other than that, I’m really bad at it.
So, for a long time, the iTunes cover art for Mixergy was just so bad. Everything was just so bad because I said, “You know what? I’m going to focus on what I’m good at.” I’m so curious. I could spend hours researching you, your shirt, your history, your past interviews. I focus on that. The rest I’ll just ignore.
Then these guys DesignCrowd started sponsoring Mixergy. I said, “You know, I know I can stand up and talk about them because my friends have used them and they’ve gotten good results.” But I finally one night when my wife was out, I said, “I’m going to use DesignCrowd.”
I went online. I went to DesignCrowd. I just filled out a simple form. I can fill out forms because I’m enough of a dork that I can do that. I said, “Here’s what I’d like. I’d like it to feel like this. I’d like it to have this. I’d like my logo to be small because no one needs to see it. But my mission here to tell startup stories, so feature that big. I can do that kind of stuff.” So, I did it and then I forgot about it, frankly. If I have a night alone, I’m going to sit and veg out. I think I was playing Mario Brothers or something, whatever that thing is on the iPhone, Mario Run. I had to disable it because I was playing it for too long. I had to delete it, I mean. I forgot about it.
Monday morning, I come to my office, I get my email and I think, “What is this?” I had like 12 different designs from 12 different designers of different cover art for my iTunes and they were freaking great. They were so beautiful. It was like I couldn’t believe that I was worthy of this. I don’t have like self-image problems, maybe I do, but I don’t lack confidence. I felt like, “I’m not worthy of this design, it’s so good.”
I kept going through it, giving feedback. The next day I got more designs from more designers and giving feedback and finally I have like five that I’m in love with and I have to pick the right one and that’s a challenge for me. The nice thing I have a lot of Facebook followers, so I’m going to pull out all those designs I like, show it to my Facebook followers, get some feedback and then pick the one I love and I can’t go wrong out of those five.
So, if you’re listening to me and you’re like me, you want great design for a reasonable price, I really urge you to check out this company that I’ve fallen in love with. It’s called DesignCrowd. All you have to do is go–well, not to DesignCrowd.com, but to a special URL–again, this was created by a Mixergy fan who’s seen me with bad design for years but he says, “I’m going to give your audience a big discount. He’s going to give us up to $100 off. You don’t need to focus on iTunes cover art. Maybe you need a new logo. Maybe you need a web design. Maybe you need a new banner for an event you’re going to.
Whatever your design needs are, go to them. They’re going to have lots of different designers pitch in and give you their ideas. You pick the one you want. You can take care of the other designers too if you love their work. Here’s the URL to get that $100 discount. Go to DesignCrowd.com/Mixergy, DesignCrowd.com/Mixergy.
All right. Neil, back to your story where the first funding came from you guys, you were MBAs, you had experience before, you banked some money, so you put it into the company. As I understand, it was like $120,000 total, right? Then you got a loan that was SBA-backed. Then you had this really interesting thing where you were looking for money and someone you were working with, I guess it was someone who was shipping out the glasses for you? Talk about where that extra, I think a few hundred thousand dollars came from and how it relates to PR.
Neil: I think people underestimate the power of PR as a tool to raise awareness, but also a tool to meet vendors and strategic partners and investors. So one of the things that happened in those early days, we were growing so quickly, we were having trouble getting product out to customers in a timely way. We were sending out emails profusely apologizing. Somebody responded to the email saying, “Hey, it seems like you’re having an issue with fulfillment. Let me see if I can help.”
It turned out he was a CEO of a publicly traded logistics company. We ended up moving our distribution center into one of his warehouses. Then the relationship continued to develop. He said, “How, you guys are really good at PR. Perhaps you could do some PR for us and give us some consulting and we’ll give you cash for that.” We thought fantastic. That helped capitalize part of the business.
Andrew: How much cash did you get for that?
Neil: I need to double check. I think it was around like $50,000 or something.
Andrew: Okay. I imagined it was hundreds of thousands. It was a lot of creative fundraising. I’m wondering why you didn’t go for more traditional fundraising.
Neil: In the early days, we didn’t need to. With $120,000, we were able to purchase our initial inventory of frames, have those manufactured according to our design specifications, build a website, hire a PR firm. Now, again, we launched in 2010, this was on the heels of the financial crisis, so people were eager to work with us at very discounted rates.
Then we launched. The business is doing great. Sales are coming in like crazy. It was 15 months before we did our first round and that also enabled us to raise money on our own terms to ensure that we as founders were protected and had control of the company so we could see our vision through. Even to this day, our board of directors is the four of us founders plus two investors plus Mickey Drexler, the Chairman and CEO of J. Crew.
Andrew: Yeah, I saw that. Is it true that Jeff Fluhr, the founder of StubHub was one of your early seed investors?
Neil: He was.
Andrew: What was your connection to him?
Neil: Wharton grad. So we met him through the alumni network.
Andrew: Really? You said, “He’s a grad. He’s founded StubHub. Let’s reach out and tell him what we’re doing and see if he’s interested in investing?”
Neil: Yeah. We started to talk to the entrepreneurial community at Wharton and at Penn. His name would start to pop up. We started to try to get advice from even local investors in Philly like Josh Kopelman of First Round Capital and MentorTech, which is also right on Penn’s campus.
Andrew: Davis Smith, who I don’t know well, is also a Wharton graduate, I think, right?
Neil: Exactly. So Davis right now runs Cotopaxi, started PoolTables.com, had started Baby.co.br in Brazil. So, we really leveraged our classmates, our professors, alumni.
Andrew: Is Crunchbase right, $215 million raised in five rounds from a lot of great investors?
Neil: Yeah. So our last round we raised over $100 million. That was led by T. Rowe Price. We’ve had Tiger Global led two of our rounds. General Catalyst led one of our rounds and then our first round was co-led by SV Angel, First Round Capital and Lerer Hippeau Ventures. One of the things that we believed is trying to get as many advocates onto our cap table as possible, so as we think about fundraising, we wanted geographic coverage. That generally meant New York, Bay Area and LA.
We wanted industry coverage, so tech investors, people that understood retail and fashion, people that understood entertainment, including film and music. So even somebody like Jimmy Buffett is an investor in Warby Parker, as is Ashton Kutcher, as is Troy Carter, who used to be Lady Gaga’s manager. So we’ve gotten some interesting people on board.
Andrew: I remember hearing from angel investors that some of their investments are really good at communicating and asking for things and others just go MIA completely because it turns out that they just feel insecure about asking or they’re not sure what to ask. I’m wondering with all these great investors with such a strategic approach to finding the right investors, what’s your process for taking advantage of those relationships properly so they can help you grow?
Neil: We’re probably in that latter category where we don’t reach out nearly as much as we could, but often for a different reason, often because we’re super busy.
Andrew: I see.
Neil: And some of the asks aren’t as obvious. When they come to us, we absolutely do. So an example is Forerunner Ventures is one of our investors. In the early days, we reached out to Kirsten Green. Before starting her own venture fund, she had been a retail analyst. So, when we were thinking about going into bricks and mortar, we asked her, “Hey, who was behind Apple’s real estate strategy?” And she was like, “I know exactly who that is. It’s a guy named Mark Masinter, who’s based in Dallas. Give me two seconds.”
She gave him a call and it turned out he was in New York. Later that day, he was in our office giving us our advice. We’ve been working with him now for several years and it’s helped us roll out 50 stores. So that’s an example. I find that if you want to take advantage of investors asking specific questions and having specific asks tends to have the best outcome, general, broad-reaching things just like you want to set smart goals with your team, you want to ask your investors smart questions.
Andrew: I mentioned earlier that center link on WarbyParker.com back in 2011 was buy a pair, give a pair, a link to your do-gooder project. I’m wondering why. When you guys barely money, why when you were trying to establish yourselves as design company that also was inexpensive, why bother with that? What was your vision for that, what was your goal there?
Neil: The goal was the same goal starting the company. We wanted to create an organization that we were excited to come to work every day, where we weren’t going to roll over and hit the snooze button.
Andrew: Isn’t money enough, like, “I’m making more money, I’m helping people wear glasses they love?” Isn’t that enough to wake up and get out of bed, “I’m giving people jobs?”
Neil: Not for the four of us. I find most of the entrepreneurs that I know, while they certainly love a good financial outcome, they didn’t necessarily start the company with the explicit goal of getting rich. They started the company to start a company, to solve a problem. Building that’s a successful company, that’s an awesome outcome if you’re able to provide for your family.
Here, we were bringing down the price of glasses from $500 to $95 and that was going to help hundreds of millions of people primarily in North America and potentially Europe and maybe parts of Asia but there were still hundreds of millions of people that didn’t have access to glasses, the people that couldn’t afford $95. So, from day one, we wanted to serve them. We thought, “Okay, we can donate maybe a percentage of revenue or a certain dollar amount.” But at the end of the day, those amounts can be manipulated, especially if we weren’t in control of the company anymore.
At the end of the day, that doesn’t equal impact. Dollars and cents big or small doesn’t equal impact. What equals impact is a human being with a pair of glasses that can see the blackboard and learn and excel in school that can use their glasses to continue their work and earn a living. We committed to distribute a pair of glasses for every pair we sell and we now have distributed several million.
Andrew: Distributed to me means giving out, but before we talked, I called my wife who’s in the do-gooder space and has been for a long time, the merging of doing good works and building a good company. She’s been in this for a while. I said, “What do you think of this buy one, give one?” She said, “Often times when companies do it, what happens is they come into a needy place and they give a bunch of stuff,” like maybe they would give a bunch of glasses, and then they put all the people out of business who would otherwise be selling glasses and they turn people off that way.
I said, “So what do you think of Warby Parker’s process?” She says, “They have something that’s innovative. They partner up with a nonprofit and then they locally partner up properly.” Then they do something I read about your site, which is sell to the end user, it turns out. Talk about that. Why do you have it structured that way? Why aren’t you just giving out one pair of glasses? There’s a reason for it.
Neil: The reason is that good intentions can sometimes have unintended results and me having worked in international development saw that all the time where there was a lot of good intentioned people that donate money or engage in work to help people less fortunate but sometimes have bad outcomes.
For example, sometimes giving away clothes for free could in an environment that’s not an acute crisis like a refugee scenario, it’s an economic development scenario where there is an economy functioning, but it’s just not as robust as you would like, giving away a bunch of stuff for free can sometimes hurt that economy as opposed to giving people skill sets and helping them grow existing businesses and jobs there.
So, when we looked at people that need glasses, the people that are most impacted are students or people that are actively working and the glasses help them see. So we thought when I was working at VisionSpring, what if we trained low income women to start their own businesses giving eye exams and selling glasses. You sell the glasses, so that way people value them and they’ll use them and it’s a forcing function to make sure you’re selling product that people want to use. It’s the ultimate feedback loop.
The second thing is that it creates jobs. In this case, it creates jobs for women, which has a great multiplier effect because every study shows that when women have access to capital, they tend to use it on the education and healthcare of their children, far more than men. In a lot of these communities, women are underemployed. This seemed to be a win/win.
So, as Warby Parker, we were deciding how do we distribute our glasses, we said, “We know VisionSpring. Neil used to work there, let’s work with them. Let’s make contributions that enable VisionSpring to procure glasses and then they in turn sell it to the entrepreneur, who in turn sells it in their community obviously at a price that’s affordable. So, in Bangladesh, that might be a couple dollars, in El Salvador or Guatemala, that might be closer to $6, $7, $8, $9, $10.
Andrew: I see. You mentioned the name Warby Parker. I didn’t bring it up. But I think it’s fairly well known at this point that it came from Jack Kerouac’s journal. There were two characters in there, Zag Parker and Warby Pepper. You connected the last name of one to the first name of the other one and came up with Warby Parker. I’m wondering–did you intend that some people would think of it as two founders who started the company like Barnes & Noble or was there this sense that you just wanted a feel that came from those two names?
Neil: Yeah, we definitely didn’t want to confuse people and make them think there was this human being, Warby Parker or they were a founders name. We just thought this best exemplified the concept and the brand we were building. The name itself sounds kind of quirky, Warby. The Parker sort of grounds it.
It sounds like something that you’re familiar with. So, hopefully we have instant credibility. You need credibility when you’re selling–even though glasses are a fashion accessory, they’re also a health product. It’s that tie to Kerouac, who’s a great American writer who had a big impact and certainly is somebody when you think about taking their own path, he’s somebody who does that. As a company, we’re trying to do that.
Andrew: The actual company name is JAND Inc. JAND I’m assuming is the four initials of the four cofounders, right?
Neil: Yeah, Jeff, Andy, Neil Dave. Of course, that’s because we incorporated before we came up with the name Warby Parker.
Andrew: I see. So, the one bit of negative stuff that I found online was I went to Glassdoor and several people had said that they weren’t getting paid much for working at Warby Parker. You’ve seen this. What do you say about that? What do you say to someone who says, “Two years ago Warby Parker was a competitive paying job. It is break even with Walmart at this point. It doesn’t say competitive pay to most people.”
Neil: It’s pretty much untrue. I speak with a lot of CEOs. I’ve never seen or spoken to somebody who was happy at their job and takes the time to write something on Glassdoor.
Andrew: I see.
Neil: But I do know people that are upset and that have been fired write negative reviews. I know competitors that write negative reviews on other folks. But our compensation structure is something that we think very seriously about and we also communicate it very clearly to folks when they join our benefits program is best in class. It’s part of our core ethos of being a B corporation and thinking about each stakeholder or not just our shareholders, but our customers, our employees, the environment and community at large.
Andrew: The other thing I saw was on Pando. Pando said your one big challenge is–
Neil: I’m sorry. I’ve got–
Andrew: You’ve got two minutes?
Neil: Yeah. I’m running to actually meet–
Andrew: Okay. I’ll finish up with this. They said there were other people who could come in cheaper than you because they had their own factories. You guys were using other factories in China. It seems like the line you gave me to describe Warby Parker, you guys now own your own factories, you said vertically integrated lifestyle brand, is that true?
Neil: We design all of our own frames. We work with third-party manufacturers to create our frames. Those are manufactured predominantly in Asia and Italy and soon Japan and then we cut and edge the lenses predominately in the U.S. and five different locations. We just opened up our own optical lab. We’ll be hiring 130 people in Sloatsburg, New York, a little over an hour outside the city where we cut the lenses, insert them into the frames and ship them to customers.
Andrew: Finally, what’s the best part of having built this business? You’ve worked at it for years. You work on it every day. What’s the best part of having done all this work?
Neil: The best part is coming to work every day and being able to work with really smart, really friendly and nice people. I think one of the things that I take a lot of pride in is that we just hired our 1,000th employee. We had a big celebration. We created this big wall where we wrote everybody’s name and people could go on and sign the name and low and behold, there were two names right next to each other and it was two people that met at Warby Parker and got married, like that’s just the most awesome thing in the world. It was just funny that they also happened to be the 21st person on the team and the 22nd person.
Andrew: Oh, wow. Well, I just love your brand. I’ve said this several times before, everything you guys do, including the way you bring you brand to local cities with that bus is just so clever but doesn’t feel overly worked on. It’s subtle beauty and I love watching it.
The website of course for–actually, everyone knows it. It’s Warby Parker. And the two sponsors that I mentioned in this interview, the first is a company that will help you hire your next great developer, Toptal.com/Mixergy and then next is the company that I used to get a great design. It’s called DesignCrowd. Check them out at DesignCrowd.com/Mixergy.
Neil, thanks so much for doing this. I know you’ve got a busy schedule and I really appreciate you squeezing me in because as I’ve said, I’ve wanted to get you on for months because I’m such an admirer of your company. Thank you.
Neil: Thanks so much. It’s awesome to be on.
Andrew: Same here. Bye, everyone. Thank you.
