Warby Parker Case Study.docx - What's Behind Warby Parker's Success(Adapted from Stephanie Denning Forbes 23rd March 2016 Suppose several years ago

Warby Parker Case Study.docx - What's Behind Warby Parker's...

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What's Behind Warby Parker's Success? (Adapted from Stephanie Denning, Forbes, 23rdMarch 2016)Suppose several years ago someone had asked me whether it was possible for a few business school students to disrupt a monopolistic company with 60-80% market share in the U.S.I would have said they were crazy. Apparently I wasn’t the only one. Adam Grant, professor at Wharton, wrote in his latest book Originals, “Back in 2009, one of the founders pitched thecompany to me, offering me the chance to invest in Warby Parker. I declined. It was the worstfinancial decision.”Adam Grant goes on to describe in his book the many doubts that seeped in about the business pitch: 1) eCommerce for glasses sounded like a losing proposition. Who would buy glasses online? 2) Decision-making seemed a little slow, taking over six months to commit to a company name. Could this slow pace of decision-making sustain a business? 3) None of the founders were pursuing the opportunity full time. If they were fully invested in the idea, how could he be?Grant reflects: “When I compared the choices of the Warby Parker team to my mental model of the choices of successful entrepreneurs, they didn’t match. [...] In my mind they were destined to fail.”Today, Warby Parker is estimated to be valued over a $1 billion.The IdeaWarby Parker was founded in 2010, by four friends, Neil Blumenthal, Dave Gilboa, Andy Hunt and Jeff Raider, who happened to be in business school.The inception of the idea had taken place in a computer lab, as the four friends lamented the state of the eyeglass industry. Why are glasses so expensive?The first Eureka moment came when investigating that very question. Dave describes: “Understanding that the same company owned LensCrafters and Pearle Vision, Ray-Ban and Oakley, and the licenses for Chanel and Prada prescription frames and sunglasses -- all of a sudden, it made sense to me why glasses were so expensive.”And with that epiphany, the idea began to take shape and the business model was born. They would create a vertically integrated company. Neil explains, “It was really about bypassing retailers, bypassing the middlemen that would mark up lenses 3-5x what they cost, so we could just transfer all of that cost directly to consumers and save them money.”If you think that’s a mouthful, that’s just the beginning: “When you buy a Ralph Lauren or Chanel pair of glasses, it’s actually a company called Luxottica that’s designing them and paying a licensing fee between 10 and 15% to that brand to slap that logo on there. If we did our own brand, we could give that 10-15% back to customers.”
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Even with all this thought out, it still wasn’t clear what would come of the idea. As Dave
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