In this weekly series, CNBC takes a look at companies that made the inaugural Disruptor 50 list, 10 years later.
At its inception in February 2010, Warby Parker’s approach to business was simple: sell eyeglasses direct to consumers online, skipping the wholesale market, for a fraction of the price.
Founders Neil Blumenthal, David Gilboa, Andrew Hunt and Jeffrey Raider, who met as classmates at the University of Pennsylvania Wharton School of Business, saw that large retailers like EssilorLuxottica, which owns brands including Ray-Ban, dominated the eyeglass industry and marked up prices by hundreds of dollars. Fighting back against these high price tags, Warby Parker marketed their frames, including lenses, starting at $95.
The business immediately took off. Three weeks after launching, Warby Parker had already reached its first-year sales targets and had a waitlist of 20,000 customers – all while the founders were full-time students, working out of their Philadelphia apartments.
Warby Parker’s direct-to-consumer business model was among the first of its kind. Through its “Home-Try-On” program, customers can select five frames that are then sent to their homes at no additional cost, allowing them to “test-run” different styles before selecting which one they’d like to purchase. The company’s framework pioneered the way for other internet-born businesses, such as sneaker brand Allbirds and athleticwear retailer Fabletics. It’s now an archetype for online retailers.
However, as the business grew, Warby Parker eventually expanded beyond the internet-only sphere. When customers began calling the founders and asking if they could try on their glasses in person, they invited them into their apartments.
“We laid out the glasses on our dining room tables and found that people love getting to meet the people behind the brand,” Warby Parker CEO David Gilboa said recently in an interview with CNBC. “We learned so much from these face-to-face interactions.”
The company moved to New York, and in 2013 – the same year Warby Parker made the inaugural Disruptor 50 list – it opened a bricks-and-mortar location on Greene Street in New York City. The company made the Disruptor 50 list again in 2014, 2015 and 2017.
Today, with more than 2.26 million active customers, 3,000 total employees and 190 storefronts, Warby Parker has pivoted to focus on becoming a “holistic vision care company.” The business now offers in-store eye exams and prescriptions. The company launched its own brand of daily contact lenses in 2019, and now offers progressive lenses as well as an app that allows customers to virtually try on frames. Warby Parker works with more than 100 optometrists across the country and is making large investments into in-person exams.
In 2019, more than 60% of Warby Parker transactions were taking place in-store. The company moved back to being entirely online in 2020 due to the pandemic but has now reopened a majority of its stores and is now seeing sales numbers similar to those in 2019, Gilboa said.
Previously relying on third party partners, the eyeglasses retailer now has its own optical labs in Sloatsburg, New York, as well as Las Vegas, where it makes most of its glasses. Gilboa said the optical labs allow Warby Parker to have tighter quality control, faster turnaround times and higher margins.
“We’re controlling that end-to-end process and get better feedback from our customers, and more satisfied customers as a result,” Gilboa said.
Since day one, Warby Parker has worked with partner organizations across the globe to give away a pair of glasses to a person in need for every pair it sells, so far donating more than 10 million frames. As the company grew, Gilboa said the company realized the need for vision care in its own backyard, estimating that out of the 1.1 million schoolchildren in New York City, more than 200,000 needed glasses and did not have access to them. Through a partnership with the mayor’s office, Warby Parker brought eye doctors into these schools and provided free glasses to students. The program now exists in multiple cities in the U.S., including Baltimore and Philadelphia.
“We really want to show that you can have your cake by building a great business, but you can eat it too by having lots of positive impact along the way,” Gilboa said.
Warby Parker first made its stock market debut in September 2021 through a direct listing as opposed to an IPO. Shares skyrocketed 36% on opening day, though analysts speculated at the time that the stock was overvalued as the company was unprofitable. Warby Parker shares have fallen more than 60% year to date, caught up in the crash of many recent high-growth startups that went public last year and are now facing an investor market that is demanding a path to profits.
“We’re in this for the long term, we’ve never really been too focused on where our stock price is,” Gilboa said. “We’re more focused on what’s in our control, how we can create the best products and best experiences for our customers, how we can create impact. And if we can get those things right, then over time our share price will rebound.”
In its most recent quarter, Warby Parker’s net loss increased to $32.2 million. Sales grew about 14% to $149.6 million compared to $131.6 million the previous year.
The company also eliminated 63 corporate positions in August 2022 that made up 2% of its total employees and 15% of its corporate staff. Gilboa and co-CEO Blumenthal said at the time they made the decision due to economic volatility and uncertainty.
“It’s never fun to let go of some of our great team members, but we decided that it was a necessary move, given what we were seeing in the macro environment and a deteriorating picture from the U.S. economy and consumer behavior at a high level,” Gilboa said.
What’s next for Warby Parker? Gilboa said the company is excited about the future of telemedicine. It recently created a virtual vision test that allows customers to complete a vision exam and receive a prescription remotely, all in under 10 minutes.
The business is also seeing a strong uptake from its contact lens offering, with revenue from contacts more than doubling in the most recent quarter. Offering contact lenses has attracted many new customers to Warby Parker who also end up buying glasses, Gilboa said, and many existing customers who first came to the company for glasses also end up using the retailer for contacts.
By the end of the year, the company plans to have 200 stores complete with eye exam suites, with “a clear path to opening hundreds of stores over the next few years,” Gilboa said.
“As we talk to our customers and ask them why they’re not shopping with Warby Parker, the dual highest responses are one, that there’s not a store near me, and the second is that I don’t have a current prescription,” Gilboa said. “And so we’re really working to solve those problems for customers by making our stores as accessible and convenient as possible.”
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