Warby Parker: Dave Gilboa & Neil Blumenthal (2016)

Hey, it's Guy here, and I've got a random bit of trivia for you. So a year after Jack Kerwak wrote On the Road, he came out with his second book. It was called The Dharma Bombs. And two of its characters actually inspired the name of a real life company. One character was Warby and the other was Parker. And the company is well, I think you can guess. And we're gonna hear all about that and a lot more on this episode, which originally ran back in twenty sixteen. We hadn't told anyone that the site was live. We didn't want to drive any traffic to it because we weren't sure it would work. So I get an order and then ten minutes later we get another order.

And then another order, and then another order. And it it kind of go from this feeling of elatement to Oh crap. Um we we don't have this much inventory.

From NPR, it's How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. Raz, and on today's show. Two of the founders of Worby Parker tell the story of how they birthed an idea, an idea that disrupted the entire eyeglass industry in America. And grew into a billion dollar company. Yeah.

So back in two thousand eight, Neil Blumenthal and Dave Gilboa Both arrived on the campus of the Wardens School at the University of Pennsylvania. They were there to start business school. And they met each other and two other students, Andy Hunt and Jeff Rader, and the four of them would go on to co-found Warby Parker. But in 2008, at that time, they didn't know that yet. What they did know, and something that they all had in common was they were really frustrated with how eyeglasses worked. And it stemmed from this thing that

Well most people have probably experienced at some point they kept losing their glasses. And Dave, in fact, Right before he started business school, had accidentally left his glasses. On an airplane. And they'd cost me seven hundred dollars.

And um I just couldn't justify as a full time student paying that much for a new pair of glasses. Yeah. Um the new iPhone three G had come out that way didn't lie at the Apple store, paid two hundred dollars for and it did all these magical things. And meanwhile the technology behind a pair of glasses is eight hundred years old and it just didn't make sense. Okay, I've got this this amazing iPhone, this magical portal to all of human knowledge. And it's g cost me two hundred bucks and yet these eyeglasses made out of plastic. Are like Super expensive.

Yeah, so yeah, I was complaining to anyone that would listen about why glasses were so expensive, and then Andy kept losing his glasses. and he was buying everything online. But couldn't figure out why he couldn't buy new classes online and why no one was effectively selling classes online. Right, because w w I mean this is like two thousand eight and I mean by that point it wasn't like you know, like selling things online was this brand new idea.

Yeah, and so We kind of started this conversation where we were kind of frustrated by different pieces of the eyewear industry. And we knew that Neil had spent a number of years uh working for a N Iwe nonprofit and and probably knew a lot more about this than we did. And so we were on the computer lab one day and uh we started asking Neil a bunch of questions and no pun intended, but I think all our eyes uh were open that there was this massive opportunity. What do you remember about that? Meeting in the computer lab, Neil what like what were they asking you?

Uh it was sort of like why are glasses so expensive? And when I was working at that nonprofit vision spring, I'd actually designed eyewear and I would go to the factories to produce these glasses and So uh I knew a little bit about uh the optical industry and um it's dominated by a few very large companies, one of which is Luxotica. Luxotica has a market cap of about thirty billion dollars. They um own Oakley, Ray Ban, Oliver Peoples Persole and our net They license almost every major fashion brand under the sun like Ralph Lorne and Chanel and Prada and Dolce and Gabbana. Um they also own a lot of the major retail chains like Lenscrafters and Pearl Vision and Sunglasses. All those things. That's crazy. Sears optical, target optical. Well so when you go to like a glasses store and all those brands, Persol and Ray Ban, and all like it's all owned by the same company? All owned by the same company. And they own the second largest vision insurance plan in the country, IMED. So You walk into a lens crafters, you don't realize that most of their selection are frames that they've made and the vision insurance that you're using is also the same company. So you knew this.

Right, exactly. So we just thought like, Oh, well, now it's a lot clearer why Classes are so expensive. So we thought, Oh. Why not sell glasses and the light bulbs went off in all of our minds and then later that night like you know when you have a feeling uh or just an idea you're so excited about, you actually have trouble sleeping. Doesn't you get can't get it out of your head. Exactly. It was that feeling. Um and I think it was like two in the morning and uh shot off an email and then at like two oh one, Dave responded, and two oh two, Jeff responded and then Andy responded, and like we were all up thinking about this. So then next day we decide, hey after class, let's all get together. Um we actually sat down at a bar right on twenty third and Walnut and over a beer.

We're discussing this more and we said, Hey, like Should we do this? Like should we really go after this? And we also said, Yeah. Okay, so you guys are at are are at business school. And you're thinking, Okay, let's do this. So I mean, at that point, what did you do? Like did you like write a business plan? Did you start looking for money? Yeah, so yeah, I think all of us we talked about how excited we were about this idea and we said, Well, we're at business school to learn how to run a business, what better way than to actually build one ourselves, so

we all decided to take the same class, um an entrepreneurship class. where the output of that class is a a full business plan. And uh so we spent the next several weeks really researching every element of Or idea. Getting um a bunch of great insights from professors.

running a bunch of surveys, standing for hours in different optical shops, and and then that culminated in essentially a 40 page business plan. We entered the Wharton business plan competition. and we got eliminated in in the semi final round. Uh, I think just kinda put a chip on our shoulder where we said, Okay, well, now we got something to prove and At that point we felt really passionate that that this was gonna work. And and at that point you're I mean you guys were still working off

of paper. I mean you you still did not have any money, I'm assuming You didn't have a product. You didn't have a manufacturer, so Why were you guys so confident? Like how How were you even able to test the idea?

Yeah, we we talked to everyone that uh would give us five minutes just about the idea. Initially we got a bunch of pushback that said, Well, the idea of buying glasses online is kind of strange to me. Um who was saying that to you? Basically all our friends and classmates. Yeah. And a lot of people told us that creating a brand is hard enough. So is creating an an e commerce site. You should pick one of those. Um but for us the magic was in creating a vertically integrated brand. Um so we honed in on this issue that we had to figure out a way that people could try on glasses. Nobody's gonna buy glasses online because you've gotta touch them, you've gotta feel them. Exactly.

Um it's a real moment of self doubt. These journeys are always these moments where you feel like a complete idiot. And uh this was like one of those challenges that really made us question should we continue to spend time on this versus the million other things that we could be doing at school? So how did you think you could get over this problem of of people You know, thinking they needed to touch them to try them on. So we just thought a lot about how do we remove every obstacle to purchasing. And the thought was, well, if we offer free shipping, that will encourage people to buy, if we offer free returns, that will also make it less risky for our customers. And that's Sort of led us to this other idea to do a home try-on program. So you guys decide, let's send these frames to people, let them try them on at home. And if they like'em. Uh, they just send them back and we'll put the lenses in and that's it.

Did you guys have I mean, were there any other problems that you had anticipated as you were thinking through This idea? Yeah, I think the other element was that we were trying to sell a product that normally costs several hundred dollars and we were selling it for less than a hundred dollars. And so Um there was inherent skepticism about the quality. Right. And so we said, Well

How do we just get as many of our glasses on people's faces as possible? Yeah. And that's when kind of this light bulb went off for the Home Tryon program, which really no No company uh was offering Until that time and we said we just want to get our product on people's faces and we think people will buy afterwards. So so so you guys wanted your glasses to obviously to be much cheaper than the competitions, like even less than a hundred bucks. How

How did you decide on the exact price? our initial thought was to sell glasses for forty five dollars. And we remember going into the head of the marketing department's office at Wharton and we sit next to him, slide the deck on his desk and say, Hey we're gonna transform the optical industry. We're gonna charge forty five dollars for a five hundred dollar pair of glasses. Um and he kinda just laughed at us and said, No way, it won't work. And we're like, Wait, you didn't even like read our deck, like every graph goes up and to the right. Um and he said, I'm sorry, guys, like first of all, price is the biggest indicator of quality and it's just outside of the realm of believability that you can sell a product for a tenth of the price. So we walked out of this meeting pretty deflated, but it led us to investigate pricing a little further and it showed us that yes, price is um indicator of quality. There's a psychological barrier around$100. So one thought was should we charge ninety nine dollars? And we felt that was too discounty and cheap and we were building an aspirational brand. So we actually settled on ninety five dollars using just our instinct, thinking that this doesn't sound cheap and that it looks deliberate and visually looks decent.

How did you guys come up with a name?'Cause it sounds like like a an aristocrat from like, you know Northumberland in England or something like Warby Parker. Yeah, we often joke that the the hardest thing that we did in those early days was settle on a name that all four of us liked. I think we still have our spreadsheet of over two thousand names that we tested on our very patient friends. Yeah. Um two early Jack Karawak characters that Dave actually discovered when he went to the New York Public Library exhibit on Carouac and two of the characters were Warby Pepper and Zack Parker.

And that's how you got the name. And that's how he and now everybody that uh joins Warby Parker on their first day on their desk, they get a Copy of Darma Bones. Along with a few other goodies. That's Neil Blumenthal of Warby Parker after the break. Neil and co-founder Dave Gilboa will talk about moving that

Well thought out business plan. Off of paper. and into the real world. I'm Guy Raz, and you're listening to How I Built This? from NPR.

Hey, welcome back to How I Built This from NPR. I'm Guy Roz, and today on the show we've got Neil Blumenthal and Dave Gilboa, two of the founders of Warby Parker. So When we left off they had come up with this idea and they thought it through and Now

The only thing left. Was to execute. How much money did you guys raise initially to to to launch this company? And how did you do it? So the nice thing about business school is that most people work for a few years before going back to school. And so collectively the four of us took our life savings from when we were working before school and invested into the business.

We invested a hundred twenty thousand dollars between the four of us, uh, to get the business off the ground and Yeah, we worked for a year and a half with Now paying ourselves a salary, we didn't have an office. We did win a couple of grants from Morton, so that that helped as well, but we were very scrappy and and very much bootstrapped for quite a while and we ended up Launching the business and then went

Another fifteen months before we raised our first round of funding. And so then how did you guys actually find them the manufacturer to make the glasses for you, right? I mean, did you Neil, did you have contacts from when you worked at that Nonprofit. Yeah. We leveraged a lot of the relationships that I had and um we went over to visit the factories. Um we actually prepared a PowerPoint. Um because even though this was gonna be a vendor that we were buying from, right, we had to sell them on our vision and that we were indeed serious and would

be able to afford to pay them. That must have payment up front. So they didn't assume much risk. Okay, so you pay for these frames. Uh the the manufacturer makes them. And then w what did you even d do with all those glasses?

Uh I do remember getting boxes and boxes of these frames shipped to our apartment and like it was a doorman building. The doorman had no idea what to do. It literally took us a couple hours to load, do all these runs in the elevator. into uh our apartment, then stack all these boxes and then unpack them and we ourselves inspected every single frame. Yeah and this was all the while we were working to figure out how we gonna launch this thing. We basically to start the business only invested in three things our initial inventory our website and some PR knowing that you only have one shot to sort of launch a brand. So you so even before you launched the company, you had a publicist going out trying to To drum up publicity for it? had meetings with

almost fifty PR firms and part of it was us evaluating them, but um at the same time we had to sell ourselves to those PR firms and right. There's Nothing less sexy in the fashion world than for MBAs from Orton. Um we knew we were gonna launch Sometime in the spring of twenty ten. And we really want it to be in these premier magazines as a stamp of approval. So what we were targeting was GQ and Vogue. And so we had some production samples, uh, we didn't have a website up.

But we were really pitching uh these magazines as exclusive launch partners. And we were thrilled to hear that GQ and Vogue were gonna run stories. We had no idea what those stories were gonna look like, what the content was gonna look like. But you guys were totally hus like this. I mean Why would these huge magazines

Like trust a bunch of business school students who n didn't even have a company. Like if you went to the website at that point, there was nothing up there. Like it's crazy to think that they would have done that, right? Yeah I th you know I think there were a few things that worked in our favor, right? One was identifying the right PR person to help represent us. But we often say that PR is I think thirty percent the messenger, seventy percent the message. And for us the message this was a pretty novel at the time, right? There was Nobody selling glasses online, so the idea of selling glasses online was novel. The ninety five dollar price point for five hundred dollar glasses was pretty novel. The home try on program was novel. So in fact GQ actually called us the Netflix uh of IWER in the article they they put. So I think they were like these hooks that writers and editors could get excited about.

So how much of an impact did that did that have on The launch of the company. Yeah, we w we were just blown away by the the impact that it had in terms of traffic and sales, so We got a call from

the day before GQ was gonna hit newsstands and we still had a landing page up. Um if you went to warbyparker.com, it said coming soon, please enter your email address. I said, Guys, what's going on here? Um GQ's hitting tomorrow And our website still had a bunch of bugs in it. We were working with one developer and we were on the phone with him kind of frantically. Working out some of the most critical Uh bugs on the site. And we finally at four AM said, Okay, guys, this is stable enough.

We all need a couple of hours of sleep before we have class tomorrow. Let's make the the site live. And we were sitting in in class the next day. We hadn't told anyone that the site was live. Our parents didn't know the site was live. Our best friends didn't know the site was live. Uh but we didn't want to drive any traffic to it because we weren't sure it would work. And I had my phone set up to be notified any time we got an order through the site. And so it was around ten AM and so I get an order and then ten minutes later we get another order and then another order and then another order and it it kind of

go from this feeling of elatement to Oh crap. Um we we don't have this much inventory and we hadn't contemplated building in any sold out functionality or wait list functionality into the site. So you were literally selling out of glasses, but people were still ordering them because it the website didn't know when you would run out of the time. Yeah, we had no inventory tracking at all. Because we you know, we were assuming one to two orders a day and kinda joke that you know, if nothing else, my mom would buy a hundred pairs of glasses from us. But we yeah, we really had tempered expectations because we we also recognized that what we were trying to do was build a brand and that takes a really long time. So we called an emergency meeting after that first hour and a half class and we were debating, okay, what do we do here? Do we just keep taking orders and then figure out what to tell people later? Do we take down the website? And while we're having this two minute discussion, I'm looking at my phone and we have ten more orders and I'm like, guys, we we gotta do something here.

And so we place an emergency call to our developer. And miraculously was able to build in this wait list functionality on the fly. And within a four week period, we'd sold out of our best selling styles. We had a wait list of twenty thousand customers. How many how many frames did you guys sell? Yeah, tens of thousands. It was um yeah. And you just did not you had not ordered enough glasses from the manufacturer. Like you you literally you could couldn't and they couldn't make them fast enough for you? You know, I I think I think we were ambitious in terms of the number of frames that we purchased, but also not overly risk tolerant. And I think we've approached this business in in a way that Yeah, let's not bankrupt ourselves on inventory. We were also constrained. I mean we hadn't raised any money from investors, so you know it was our our life savings that we poured in. So there was

Really a a limited uh number of frames that we had the ability to purchase. So I mean It sounds like a good problem to have. That you you you have a wait list of twenty thousand people. You you're like

Out of the gate, you're just Killing it is that am I right, or was it actually a bad problem? Yeah, I think we learned a lot of important lessons in those early days where we were terrified that right we had all these early adopters that were excited to place an order from us and we didn't have anything to sell them. And for a lot of those customers, it took us upwards of nine months to get through the wait list. So we were terrified, you know, are these people gonna leave with a bad taste in their mouth that you don't really only have one opportunity and launch a brand. Yeah, I mean They were waiting when a lot of companies would not survive that. Yeah, yeah, I think it did have some positive effects that it created this aura that wow, this is in really high demand and um nothing creates cool like scarcity. Uh but I think we you know, we also learned uh a lot of important lessons in terms of um, you know, being empathetic to customers.

All four of us founders, we reached out to everyone on that wait list um for people that were had bad experiences or were really disappointed. We would give them free glasses, we gave people discounts. From the get go, we wanted to create a business to have a positive impact on the world, and part of that is treating customers fairly. It it's treating them fairly when it comes to price. It's treating them fairly when they call up and complain. And to apologize and explain when we make mistakes. And and that was something that we did from the very beginning. Yeah, we w were primarily uh you know, we're still trying to figure out how to run this business. We were working out of our apartments as full time students. Our customer service line was a Google Voice number that we set up when someone would call. it would simultaneously ring all four founder cell phones and whoever whoever answered. You were the customer service rep. And so we looked at our class schedules and there are twelve hours per week when all four of us were in class at the same time. And uh we said, well we should hire someone who can answer the phone when none of us are available.

And so we hired this woman named Mara and uh said you're gonna be working twelve hours a week and trained her on what we were doing and Um, I think that first week she ended up working a hundred hours and now she's running our customer experience team, which is about a hundred fifty people. And so it was it was uh kind of off to the races from day one.

So did you guys I mean h how quickly Did you guys kinda get together and just say Holy hell it wait. This is real. We're gonna make it. We were too busy staying up all night responding to customer emails and I remember when the first couple days like we actually decided to go to one of the classes that we were all in and

we were all typing feverishly on our computers because we weren't really paying attention and we were just responding to customer emails and helping to process orders um and everything in the classroom got really quiet and then the four of us sort of looked up and Everybody was staring at us, including the Professor. And here we were typing away when clearly there were no notes to be had. It was obvious you were not you were not listening. I mean I I remember waking up every morning uh with a laptop on my chest because I'd honestly responding to customer emails and there was just an overwhelming amount of work in those early days and so we didn't have uh you know even a minute to breathe and and take a step back and and think about what was happening. So So after this launch and after the company obviously

you know, starts to gain traction. When did you guys decide You know, like we we better start to raise some money. Um we went and tried to get debt'cause we figured like why give up equity? And if we could just get some loans to help us fund this inventory that we needed. We went to eighteen different banks and only one would talk to us. Uh and again this was Two thousand and ten, so soon after the financial crisis. And what all these loan officers said is, Hey, we've never seen such a beautiful business plan. We've never seen a company that has such great early results, but we can't give you a loan because you don't have two years of tax returns.

So so what did you guys do? Um we ended up getting a two hundred thousand dollar SBA loan. Um, we had to sign probably four hundred documents, including one that said we weren't gonna use the money to open a zoo. Um and uh we really tried to think of other creative forms of financing the business. And so uh we were working with a third party logistics company that managed some of our inventory and a CEO loved our brand, our business, and he was asking, what can he do to help drive growth in our business so that they can have more business. Yeah. And we said, Well, uh really constrained by our ability to purchase inventory at this point. He said, Well, you guys seem like you're really good at PR Our company needs some help with PR. What if

You do some PR consulting for us. And we'll pay you a few hundred thousand dollars for that. And we said, Yep, that's great. So, okay, so you launch in 2010. Today you have close to Eight hundred employees.

Uh you've sold I'm sure millions of pairs glasses. How much do you think your success was was because of you know, you guys are like super smart and you're really hard workers or Or how much of it was was luck? We like to say that there's a lot of deliberate serendipity. For example, we were really lucky to be exposed to our marketing professor that helped us think through pricing, but we had created good will by being friendly and doing well in his class that he was willing to dedicate time to us. So I think there's a million examples of that or

um our friends calling in favors on our behalf. One of the things that we were just straight up lucky on is timing, right? Timing is everything. You know, coming off the financial crisis. Uh the public was looking for ways to save money and I think a brand like ours even resonated even more. So so last year I read that that you guys raised like Something like a hundred million dollars from investors. So What's what's the company valued at at now? Uh our last valuation was over a billion dollars. When you when you hear that, a billion dollars

Do you think That's crazy. It is pretty crazy. Yeah. It's exciting, but not nearly as exciting as like coming to work every day and being in an office that we've actually design ourselves. Seeing people in the subway wearing our glasses like that will never get old. Can you recognize your glasses? Oh yeah.

I in fact like the first time that we saw the glasses in in the wild, I remember seeing this person at a corner of my eye, I was on the subway platform at Union Square. And I just started following the person. And you know, being in New York like if someone's following you on the platform like freaking so got a dirty look, but I had this big like Year to ear smile. That's Neil Blumenthal of Orby Parker. Neil and Dave Gilboa co-founded Warby Parker with two other friends from business school, Jeff Rader and Andy Hunt. The company actually partners with the nonprofit where Neil used to work, Vision Spring, to bring eyeglasses to people around the world who don't have access to them.

And please do stick around because in just a moment we're gonna hear from you about the things you're building. Hey, thanks so much for sticking around because it's time now for how you built that. And we're gonna update a story we ran about a year ago. This one started when Adam Masters was kayaking on a creek near Sunset, South Carolina. And there was overhanging rhododendron that created a tunnel all the way down the center of the creek. I mean it was maybe like two feet above the water. So you can only like lay down and go underneath these limbs. So that's what he did. I laid on top of my kayak and went down the creek that way and it was exhilarating. So that's what gave me the very first idea. And his idea was to build something he eventually called a bellyak. It's shaped like a kayak, but there's no hollow space in the hull, no place to sit. So instead, the surface is flat. You can lie on top and paddle with your hands. What I liken it to is it's like flying. It's the feeling of flying on water.

and you know, having a high performance freestyle kayak haul, which is made to respond to every nuance of the current and feeling that through your entire body and having your hands right there in the current. That was such a thrilling feeling. For about a year and a half, Adam tinkered in an old warehouse with some urethine foam. to get the Beliac just right. And I built 24 different models because I would build it and I'd be like, wow, that was good, but I need to add a little more volume to the bow. Or what if it were a little narrower here and a little wider here? So I I would have more questions, right? I'd start with one question, what would it be like if?

And after playing around with it for a while, he finally perfected the bellyak. Adam got a patent and he was thrilled because he thought Kayakers, they are going to love this thing! But he was wrong. people looked down their nose at it as something that they were too good for.

And really it was because kayakers already know how to kayak. It's like trying to sell a different type of mountain bike is somebody who already mountain bikes, they already have their tool for that terrain. But over time, Adam realized there were other groups of people who did like the bellyak. Swimmers, triathlete, surfers. and a group he was surprised to hear from at first. disabled veterans. The Bellag allowed somebody to get out of their wheelchair

And they could be mobile, they could have exercise, they could work on their balance. And the coolest thing was is I've talked to so many guys who've used it who've been like, man, ever since my injury, I've never thought I would swim again, and this helps me get back in the water. And that's been the coolest thing to see. So since we first spoke with Adam last year, he was a guest on the TV show Adventure Capitalist, which is kinda like Shark Tank, except all the products are outdoorsy, like bikes and skis, you know, that kind of stuff. Anyway, one of the investors on the show offered to put up$100,000 for 20% of Adam's company. He said No. He did not want to give away that much equity. So for now, he's growing his company slowly with no outside investment. And so far, he sold about 1500 Belyaks.

And if you wanna find out more about Adam's company, check out our Facebook page to search for how I built this. And of course, if you wanna tell us your story, go to build.npr.org. We love hearing about the things you're building. And thanks for listening to the show this week. If you want to find out more or hear previous episodes, you can go to howibuilthis.npr.org. Please also do subscribe to our show at Apple Podcasts or however you get your podcasts. You can also write us at hibt at npr.org. You can tweet us at how I built this. Our show was produced this week by Casey Herman, with original music composed by Ramteen Erablui.

Thanks also to Neva Grant, Sanazmepur, and Jeff Rogers. Our intern is Noor Kutsi. I'm Guy Raz, and you've been listening to How I Built This from NPR.

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