Framing the future of eyecare with Neil Blumenthal and Dave Gilboa of Warby Parker

0:00Wondery Plus subscribers can listen to How I Built This Early Early and Ad Free right now. Join Wondery Plus in the Wondery app or on Apple Podcast. I love traveling with my family. We did an awesome trip this summer. And one of the things that made the trip so special were the Airbnb experiences we did. Immersive tours, cooking classes, a chance to get coffee with a world-class barista. I had so much fun on those experiences that I decided to host my own Airbnb original experience in San Francisco, designed to help you think about how to unlock your next big move in your career or even in your life.

0:41To learn more about my Airbnb original experience, head to Airbnb.com slash Guy. Listening on Audible helps your imagination soar. And no matter what you like, Audible's romance collection has something to make you swoon. Here's your invitation to have it all. Find a book boyfriend in the city and another on the hockey field. Or if nothing on this earth touches your heart, you can always find love in another realm. Hear modern rom-coms from authors like Lily Chu and Allie Hazelwood, the latest romantic-y series from Sarah J. Maas and Rebecca Yaros, and Regency favorites like Bridgerton and Outlander.

1:19And that's only the beginning. Audible has an incredible selection with over 1 million audiobooks, podcasts, and Audible originals all in one easy app. And you can enjoy Audible anytime while doing other things. Household chores, exercising, on the road, commuting, you name it. Audible makes it easy to drop into your fantasies during your everyday routine without needing to set aside extra time. There's more to imagine when you listen. Your first great love story is free when you sign up for a free 30-day Audible trial. Visit audible.com slash built. This episode is brought to you by Klaviyo, the only CRM built for B2C and the key to making Black Friday and Cyber Monday your biggest wins yet.

2:02When the holidays hit, your competition only gets louder. That's why the most successful brands use Klaviyo to cut through the noise and build personalized relationships that drive more revenue. With Klaviyo, you get marketing, service, analytics, and all your customer data together on one AI-powered platform. It's everything you need to build lasting customer relationships. Send exclusive email offers to your VIP customers. Deliver perfectly timed text to high-intent shoppers. Maximize your ad dollars with precision. Join the more than 176 ,000 brands, including Away, Patrick Ta, and Dollar Shave Club, already growing with Klaviyo.

2:49Make this holiday season your best yet at klaviyo.com. Hello and welcome to How I Built This Lab. I'm Guy Raz. So I think it's fair to say that Warby Parker has transformed the way Americans buy glasses. When the company launched back in 2010, the industry was dominated by just a few legacy manufacturers, and getting a pair of glasses for under$100 was virtually unheard of. The co-founders, Neil Blumenthal and Dave Gilboa, were actually some of the first guests we had on How I Built This back in 2016. And if you haven't heard that episode, it's worth scrolling all the way through the podcast queue.

3:33It's towards the bottom to check it out. It is such an inspiring story. Anyway, fast forward to today, and Warby Parker is no longer the scrappy startup it was back then. It's a publicly traded company with more than 200 stores across the U.S. and Canada and more than 3 ,000 employees. But getting to that point hasn't exactly been smooth sailing. The social media landscape that helped Warby Parker reach so many customers in the 2010s has completely changed. And competitors have entered the space, offering similarly sleek and stylish glasses at even lower prices. And maybe the biggest change of all, artificial intelligence, which Neil and Dave says is one of the main things that keeps them up at night today.

4:20But we'll get there. From the beginning, Neil and Dave have led the company as co-CEOs, an arrangement that's still in place today that they say helps them more effectively run their company. Having a partner makes the highs a bit higher. We get to celebrate together when things are going well and it makes the lows a bit higher where you have someone who can help pick you up when things are not on track. And there hasn't been a situation where we can't align and find a path forward. And so I feel very lucky to be on this journey together. I think being a founder, an entrepreneur can often be very lonely.

5:01And so having a partner has been incredibly beneficial for both kind of mental health and for achieving better outcomes. But we also recognize that it doesn't make sense for both of us to be involved in every meeting and every conversation. And so we do try to divide and conquer where we can. Sometimes that means that one of us is speaking at a conference while the other is managing some internal meetings. And then we each have our own direct reports. So every department, every executive only reports into one of us. And that allows us to kind of spend more time in those parts of the business. Then Neil and I are constantly updating each other probably a couple dozen times a day if there's new information that's coming up.

5:46And then at least on a monthly basis, we'll each join the one-on-ones that our partner has with his direct reports. And so we're kind of constantly in the loop on all information that's going on in the company. And if we need to substitute for one another, we're informed and we can provide continuity. But it also enables us to be efficient in managing the day-to-day aspects of the business. Neil, what happens if somebody says, oh, I spoke to Dave about this or vice versa? I spoke to Neil about this. Like, I'm sure that happens and has happened a lot over the last few years. It does sometimes happens.

6:20And we joke around that we don't want to get in a situation where, you know, somebody gets one answer from mom and then goes to dad. We've now have a lot of practice. If someone's asking for something that requires a little bit of thought, we don't feel an incredible amount of urgency to quickly commit to something. And we'll say, hey, we'll get back to you. Right. One of our friends is a former Navy SEAL and was head of a special operations group. And he taught us, hey, when you're faced with a decision, often like the first decision you have to make is how much time do you have to make this decision?

6:53Right. If you're in the Navy SEALs, often you have split seconds to make decisions in business. You have often a lot of decisions. That means that you can't be slow, right, because a competitive environment is fierce and you need to be making quick, informed decisions. But, you know, a couple hours a day often doesn't make a difference. In fact, it actually leads to a better outcome because you're more thoughtful and you might, you know, ask one more question, right, that leads to a better outcome. All right. So there have been a lot of changes at Warby Parker since we last spoke. You've got stores, more competitors, you've gone public.

7:30and we'll talk a little bit about all those things. But let's just talk first about the competitive landscape and the challenge of breaking through. I mean, when you've got all these new competitors in the space, how have you responded? You know, for example, on price, like if a competitor is all of a sudden offering something that looks similar, does it affect how you guys price your products? We think the best brands and the best companies really understand the market. and you have to be constantly evaluating pricing right across the board. And of course, because of the internet, right, it's made pricing very transparent.

8:09We've always believed in providing exceptional value and we define that as charging a fraction. So literally a fourth or a fifth of what other people charge. So we launched with$95 glasses and we still sell$95 glasses today. Now we've introduced some additional frames that have more complex construction that costs more to manufacture, like our precision progressives offering, which is a top-of-line progressive lens, generally for people over the age of 45 that have a complicated prescription. Those start at$395, whereas they would cost well over$1 ,000 elsewhere. So we're always looking at providing exceptional value.

8:54And then also we don't foresee a lot of new entrants challenging us in the short term. And if we look at the overall market, 88 % of glasses are sold in bricks and mortar. So it's still only 12 % online penetration, which is really low. So if we want to really scale and tackle this market, we got to be focused on that 88 % to 90%. And those are the big optical chains that have a thousand plus locations. There's also a long, long tail of independent optical shops and optometric practices that don't have the capital or the technological resources to invest in a customer experience like we do. So right over the past few years, we've launched the first of its kind true to scale virtual try on.

9:47Yeah. So we were innovative when we launched with a home try on, right? Select five pairs of glasses, we ship it to you free of cost. You have five days to try it on at home. Well, now, you know, once people had iPhones in their hands with a true depth camera, we were able to create a virtual try on that was great and helpful because it actually put a digital image of the frames on your face true to scale. You can move your face around and really get a sense for how they look and feel. Similarly, we launched a virtual vision test that enabled folks to do a simple vision test from their home so they could renew their contacts or glasses prescriptions.

10:26These are things that keep us a step ahead of everyone in the category, whether it's a new entrant or a legacy retailer that's been around for decades. So, all right, let's talk about the brand impact because I have had so many conversations on the show where people have referred to the Warby Parker model or the Tom's model or, you know, you guys were really pioneers in D2C and also in this one-to-one giving model. You know, I've been to Warby Parker stores, I've gone on the website, and the one-to-one model doesn't seem like it's emphasized as much. I know you still do it, right? You still give one pair of glasses away for everyone you sell.

11:06But I was surprised that it's not like front and center of how you position your business. So can you talk a little bit about that for a moment? Sure. I think we've learned, and we learned this very early on. In fact, actually, when we were working on the business plan is what's most important to customers. And when they're buying glasses, what's most important is the glasses look good on their face. Then how much do they cost? And then is it good quality? And is it good service? Lastly, you know, is there a social ethos behind the brand and is my purchase sort of helping and serving others? So with that knowledge, when we're meeting new customers for the first time, we lead with fashion, right?

11:50Glasses are a core part of someone's identity. We want them to look great. Then we tell them that's only$95, right, including all the bells and whistles. and frankly it's not until usually after they purchase that they even learn that for every pair of glasses we sell we distribute one to someone in need yeah i wonder whether consumers i mean you kind of address this a little bit but i want to dig into it a little bit more is there evidence as far as you guys know that consumers really care or choose a brand because of its social mission like it doesn't move the needle that much so what we found is that The biggest impact is in our ability to attract and retain some of the most talented, passionate, driven people in the world who want to work for a mission-driven organization.

12:37And so that's where we tend to see kind of the biggest benefit from a business standpoint. It's about attracting good people to work for you more than selling more glasses. Yeah, we do think that it creates a positive halo for the brand. And, you know, we think that engenders goodwill probably creates more opportunity for people to talk about the brand when someone comments on how good they look in their glasses. And so we do think that there are some tangential benefits from a customer standpoint, but we don't believe that it dramatically influences how people shop for glasses. As Neil said, what people care most about is, you know, do these glasses look good on my face?

13:20Is the service great? Is the value and the price great? Yeah. But aside from also retaining or attracting talent, why? When you ask yourselves, hey, this is why we do that. This is why we spend a considerable amount of our capital resources on giving glasses away. How do you explain it to yourselves? It's motivating to us. And when we were starting the business, we were trying to figure out, hey, what's the type of place where we're going to want to come to work every day. Where are we going to want to give our blood, sweat, and tears? When we're tired in the morning, what's going to motivate us not to hit the snooze button, but to wake up quickly and get to the office?

14:03And it's doing good in the world. And we were frankly shocked that there's a billion people on the planet that don't have access to glasses, right? That's crazy. And that requires real strategy, real resources to tackle problem of that scale. And we've seen that actually as we've grown as a business, right? We started primarily just providing glasses overseas in places like India and Bangladesh. And as we've scaled and have gotten more expertise and resources, we've then been able to go into schools across the U.S. and convince school districts and city governments to partner with us to hire eye doctors.

14:44And we're actually right here in New York City, we're providing glasses to every kindergartner and first grader that needs them. So we partner with the city. We have doctors that go in and provide eye exams to those that need it. And then we lay out a bunch of frames that our team has designed and the kids have agency and they choose what pair of glasses they want. We make them, they get them back in a couple of weeks and the glasses look good on their faces and they use them and they perform better in school. It's awesome. So is there a part of the team that's only focused on this part of what you guys do?

15:20So we do have a social innovation team that's focused on figuring out how we can have as much impact as possible across stakeholders. And then we've actually found that it's incredibly motivating to our core team members in functional areas of the business to be able to spend part of their week on these efforts around getting glasses to students in need in schools and in low-income areas across the U.S. And so our eyewear design team, they actually design these frames for kids. Our merchandising team goes through kind of a full merchandising process like we would for any collection that we'd be selling to customers, our supply chain team, in our optical labs, they're cutting lenses, inserting frames, and shipping them off to schools, and incorporating that into kind of part of their actual functional job duties.

16:16They're able to connect the work that they're doing to the impact that we're having, and again, really motivates and attracts talent that wants to feel like their work means something. We're going to take a quick break, but when we come back, how Warby Parker is reaching new customers and why brick and mortar is anything but dead. Stay with us. I'm Guy Raz, and you're listening to How I Built This Lab.

16:50If you've been listening to the show these last couple of episodes, you've probably heard me mention the Airbnb original experience that I'm hosting, and I'm so excited to have a chance to connect with listeners in a completely new way. It's called the Reinvention Lab, and it's designed to help you think about how to unlock your next big move in your career or even in your life. I'll help you discover your own story in ways I do on this show with my guests. And attendees will get a chance to take a deeper dive with me on so many lessons I've learned from this show, lessons that have transformed how I work and think about the future.

17:28All proceeds from the event will go to support the Ronald McDonald houses that helps families stay near their children who are being treated at nearby hospitals. It's going to be really fun and I can't wait to meet you. So come join me in San Francisco and take your idea to the next level. To grab your spot, visit Airbnb.com slash guy. It's going to be great. Ever had one of those afternoons where your brain just quits on you? You're sluggish, hangry, maybe even a little foggy. What if it's your glucose? See, glucose is an energy currency for your mind and body. When it's stable, you're on point.

18:07When it crashes, so can you. That's why Lingo is so interesting. Lingo is a glucose wearable designed to help you connect the dots between your glucose and what you eat, how you move, and how you feel. It shows your glucose data in real time. Instead of guessing, you see the impact of your choices. Maybe that healthy snack is actually sending your glucose on a roller coaster, or that afternoon walk is the perfect stabilizer. It's about unlocking your consistent best all day long by truly understanding your body's unique responses. Get to know your glucose and learn about how to build healthy habits that work for you with Lingo, designed for you by Abbott.

18:47Through November 30th, use code GUY10 on hellolingo.com to get 10 % off a Lingo plan purchase, one use per customer. This offer cannot be combined with other offers, U.S., Puerto Rico, and U.K. only. The Lingo Glucose System is for users 18 years and older, not on insulin. It is not intended for diagnosis of diseases, including diabetes. Individual responses may vary. Shopping for eggs should be simple. A happy hen makes a happy egg. And that's why eggs from Happy Egg are so delicious. Happy Egg partners with family farms across the Midwest to raise happy hens outdoors. The proof is inside the shell.

19:29A tasty orange yolk. It's the difference you can see and taste. I just made an incredible omelet with eggs from Happy Egg. It was delicious and so fresh. Once you crack open a Happy Egg, you can see and taste the difference right away. It's obvious. Visit www.happyegg.com slash built to find Happy Egg near you.

20:18that often arises from connecting with the people you cross paths with. So from that perspective, your show gave me the confidence to get out there and build a business. And it also gave me the patience to wait to come across the right co-founder. But thank you so much for helping me make the right decisions and for highlighting the magic of connecting with people you meet along the way. If you want to share your favorite episode of How I Built This, record a short voice memo on your phone telling us your name, where you're from, what your favorite episode is and why, a lot like the voice memo you just heard.

20:50And email it to us at hibt at id.wondery.com. And we'll share your favorites right here in the ad breaks in future episodes. And thanks so much. We love you guys. You're the best. And now, back to the show.

21:15Welcome back to How I Built This Lab. So when Warby Parker first launched, it was a direct-to-consumer brand that only sold its glasses online. But now, Warby Parker has over 200 stores across the U.S. with plans to open even more. Was that more of a marketing play, you know, that if you get stores, a brick and mortar store out there, people become more aware of your brand or was it more complicated than that? Yeah. So at the end of this year, we'll have 240 stores across the U.S. and Canada. Wow. And our journey into retail was one where it started by just listening to our customers and trying to solve their problems.

21:56And we came to appreciate that having convenient physical locations enables us to make shopping experience convenient for our customers, enables us to hire eye doctors and offer eye exams, enables us to have opticians where we can offer adjustments. But it's more expensive than just doing a D2C brand. There are certainly real costs that are associated with opening stores from paying rent and building out the stores and hiring teams. But the costs of operating an e-commerce business have also increased dramatically over the 13 years since we came into existence, where you essentially have landlords in the form of Google and Meta.

22:40And when you open stores, those stores serve as billboards and are able to attract customers on their own. And we find that the economics for us are pretty comparable regardless of a channel that customers are shopping in. Yeah, it's interesting you mentioned this, that I think that's a very apt analogy. Google, Meta are the new landlords because you want to reach customers, you're forced to pay money to those platforms. Help me understand your kind of approach to that world. I mean, is that where for the foreseeable future, maybe even beyond that, marketing will be that it is going to be dominated by these two companies?

23:21So we believe that all brands can benefit from those platforms. They're very efficient in getting in front of the right audiences, but they're charging more and more for that opportunity. You can't just rely on paid media and advertising. And by far, the number one source of new customers for us is our existing customers. And if we're able to treat our customers well, if we're able to give them a great experience, they tell other people about the brand. And that's really the number one marketing tool for us. Yeah. I remember walking through downtown San Francisco in 2017 with somebody who said to me, brick and mortar retail is dead.

24:04It's over. It's all moving online. And your company was an example of that. And then more people said COVID is the death knell of brick and mortar retail. No one's going to come back to it. Do you think people were wrong? Because you're growing. I mean, you've got 230 plus stores. So clearly you're bullish on having physical locations. Why? Yeah, I think people were way wrong. And that doesn't mean that e-commerce penetration is not increasing in most retail categories, but it's not increasing at the rate that would make bricks and mortar sort of disappear. And then similarly, retail in general, right, consumption is increasing.

24:50So the whole pie is increasing as well. Listen, there are over 48 ,000 optical shops in the U.S. That's a lot. And the vast majority of Americans prefer to go into a physical space to shop for glasses, to get their eye exam, to talk to an expert. And that's not changing anytime soon. Yeah, I think probably the most powerful aspect of our business model is that we have a direct relationship with our customers and we're constantly collecting feedback and data around the customer experience and where there's friction and where we're exceeding expectations and where there are problems for us to solve.

25:32And what was very clear when we launched and we were scaling our e-commerce business was that people loved our product. They loved the experience. They loved being able to do a home try-on and try-on frames. What was really frustrating to them were the aspects outside of the Warby Parker journey where they had to get a new prescription and we didn't have any doctors to send them to. So they had to go to a non-Warby Parker doctor and it was kind of a disjointed customer journey for them. And in particular, optometry is interesting. It's the only part of human medicine where a doctor can prescribe something to their patient and then sell them that product and make margin on it.

26:13If you go to an MD and they write you a prescription for a drug like Lipitor, you go to a third-party pharmacy, the doctor's not making money on that. Optometry is different. And so there are all these economic conflicts where someone would try to order from us. They'd send us their prescription. It'd be expired. We'd say, here are some local places where you can get an eye exam. They would go to update their prescription, and then there'd be a kind of pretty high-pressure environment for them to purchase glasses from that location. And we found kind of increasing complaints from our customers that they would love a more convenient way where they could complete their entire customer journey at Warby Parker.

26:54And as we started opening stores across the country, we hired doctors for some of those stores. And we found that customers loved being able to have one stop where they could get their prescription, buy glasses, and then also get contacts from us. And so that's really where we've been spending a lot of our time making sure that we can reduce friction for customers and patients and make the entire customer journey as easy as possible. It's interesting. I'm thinking about the brick and mortar store and how it helps you. Is there evidence that you have gathered that shows that it's like a reinforcing system where the store increases awareness?