Neil Blumenthal and David Gilboa, two founders of Warby Parker, explain how they dramatically undercut the dominant glasses makers. They position their $95 vintage-inspired frames like women's fashion accessories--not just to be sold when a prescription runs out.
00:00 Neil Blumenthal: Warby Parker designs and produces vintage-inspired frames with prescription lenses for $95 whereas it would typically cost $500. And for every pair that we sell, we distribute one to someone in need.
What is the main challenge in the glasses industry that you want to overcome?
00:18 Blumenthal: When we were sure of exploring this opportunity, we took a look at the industry dynamics and we found that there were few very large companies controlling the market and keeping prices artificially high. One such company is Luxottica and they basically own the frame industry. So they're vertically integrated. They own manufacturing facilities in Europe and Asia. They own licenses to all the major brands like Chanel, DKNY, Ralph Lauren. So when you buy those brands, you're buying from a company that's just licensing and paying a royalty to those brands. Those brands aren't even designing those frames or manufacturing it or even selling it. So when you look at an industry and you see that there's this one company that's doing roughly $7 billion a year in revenue and we're finding that those glasses are being marked up more than 20 times what they cost to manufacture, we thought, "This is something where we can do good. We can disrupt this industry and hopefully bring down prices for everybody because it just doesn't make sense." So we thought that there had to be a better way. And low and behold, we discovered that you could provide the same quality of glasses but for much lower price about $95. And in the process we felt we could build a company that could do good in the world and could really be thoughtful in terms of all the stakeholders. So for our customers, it would be exceptional value, that $500 product at $95. For our employees, it would be a place where they could flourish and grow professionally and personally. For the one billion people on earth that don't have access to glasses, we thought that we could provide a pair to them for every pair that we sell.
How do you push for change in the industry?
02:02 David Gilboa: What we need to do is really educate consumers so that they understand that there's really no fundamental reason why glasses need to be so expensive. At the end of the day, it's a couple pieces of plastic and metal. It's technology that was invented several hundred years ago and there's really been little innovation on the product side or the distribution side. And the reason why there has been such little innovation is because essentially there's oligopoly that controls the industry. Part of our thesis is that under $100, people start to think of glasses as fashion accessories as opposed to something that they buy every time their prescription expires. And so in the US today, the average eyewear consumer buys a new pair every 2.1 years. We want to drive that down dramatically and make people think of eyeglasses the same way that women think of purses or shoes where you can own multiples pairs. You match them with different outfits or you wear them for different occasions. You can have one pair that's a little more conservative, you wear it to the office. You have a couple pairs that you'd wear out socially. And we're already starting to see that among our consumer base where a lot of customers are buying six, seven, eight pairs at a time, which is really exciting.