Welcome to a special encore episode of Remarkable Retail. We are revisiting our interview with Neil Blumenthal, co-founder and CEO of Warby Parker. Steve, it took us a while to get Neil on the mic. Well worth the time spent, and we thought a great choice for an encore episode as they've just put out very good numbers, and he talked about it back in the fall when we spoke with him. And once again, I thought just a perfect encore episode for the folks in case they missed it or to have another listen to get some context to those great numbers.
Yeah. Well, it's been, I don't know, a year and a half or so where the metrics, kind of the underlying customer metrics at Warby Parker looked quite good and had great momentum, but they hadn't yet broken through to GAAP profitability, which they did do in the last quarter, as you alluded to. And we just continue to see, which frankly we don't see from a lot of the companies that more or less started around the same time, you know, the so-called disruptor digitally native vertical brands. Many of them, if almost close to all of them, have really struggled, have not yet reached profitability. But Warby Parker keeps putting up great numbers. They also have really good momentum on store openings. As we talked about when we talked about their earnings, they have designs to get to 900 stores. They will soon be at 300 stores. Um, they have really not, other than a few stores, I think they have like five stores in Canada maybe. I don't know if you happen to know that number, but they have not broken out from North America, which I imagine is somewhere on their roadmap. Um, so yeah, it's a great, great story. Now, I will say a couple of things. One is it's great to break even, but, you know, it's not as if they're getting a great return on investment after 15 years in business. So still a little bit more work to do there, but the trajectory is great. You know, I think they have a lot of room on new stores, but at the pace they're opening them, it's going to take them a long time to get to 900. So I don't know if that's a super aspirational number or whether there's a little bit of caution on the pace of store openings, but I think, you know, to kind of triangulate to get there, you would expect them to be more opening like 60, 70 stores a year, where the number is materially less than that. But that might be a little bit of a pause given the economic conditions.
Yeah. And we asked him... Throttling down. Yeah, that's a great way to put it. We asked him that in the interview and he said, 'Well, it's basically math, right? We're just expanding as the math dictates from a model that they're looking at.' So, so far so good. Anyway, it's a great interview. Let's get to it right now. Neil, welcome to the Remarkable Retail podcast. We're so excited to have you on. Where do we find you today?
Um, I'm in my headquarters here in New York in SoHo.
I am. I am. Uh, we share a few things. I did spend quite a lot of time in New York, and I also, when I was checking your background out, discovered that we both went to Tufts University. Go Jumbos.
Yeah, go Jumbos. But I was just a little bit ahead of you, just a few years, but it's nice to see a fellow Tufts grad do okay with themselves.
That makes us older graduates very, very proud. But in any event, enough about that. Um, we have so much we want to talk to you. Big fans of Warby Parker. Uh, but before we kind of just jump in, maybe you could just give us a little bit about how you ended up where you are today, you know, a little bit your personal professional journey, whether you always wanted to be an entrepreneur, that kind of thing, and then we'll talk more about the brand and where you guys are going.
Sure. Well, I definitely wouldn't have predicted that I'd run a lifestyle brand or an optical company in particular. Um, I grew up in New York City, went to Tufts as we were discussing, um, really to study international relations. Um, I had always been passionate about, you know, trying to do good in the world, and I thought that one of the ways to do that would be to help countries get along and to help resolve deadly conflicts, wars per se, so we could focus on the big issues like health and education. Um, and I say that because, um, after sort of graduating from Tufts, studying international relations, I then did some graduate coursework on conflict resolution and international mediation. Um, worked at a think tank for a little bit to come up with policies to resolve deadly conflict. Um, kind of realized that the policy world wasn't for me, and, um, somebody who is, you know, entrepreneurial and, you know, likes operating, I met an eye doctor named Jordan Kassalow, um, who sort of exposed to me that there's about a billion people around the world that don't have access to glasses, um, and need them. And I thought that was crazy. Glasses were invented 800 years ago, right? So we're failing as a species if we can't, you know, provide glasses to people in need. Um, and he had this idea to train low-income women in areas where people were living on less than $4 a day to start their own businesses giving vision screenings and selling affordable glasses, um, to help solve this issue. And it was a social entrepreneur model where people were incentivized to help people get glasses so they could see and, you know, earn a livelihood. And, um, I thought that made a lot of sense. So I ended up spending five years, um, running the nonprofit that he started, um, and creating programs in over 40 countries in places like El Salvador and Ghana and India and Bangladesh. Um, and in doing so, I learned about sort of the power of a pair of glasses to transform someone's life. But I also learned a little bit about the industry. Um, and I would visit the factories where I was sourcing glasses for people living on less than $4 a day, and 10 feet away on production lines with the same equipment were some of the biggest names in fashion. Um, so it was clear that what it cost to manufacture glasses didn't necessarily justify the high prices that you'd see in the US and, you know, on Madison Avenue in New York, per se. But, um, after five years running this nonprofit, I went to business school. I went to Wharton to get my MBA. Um, and thought that I was going to go work, um, maybe in management consulting. I actually had an offer to work at McKinsey. Um, I made that mistake, but I recovered quickly.
So it sounds like you did too. You were Bain, right? You were Bain.
Booz Allen. Booz Allen. Yeah. I feel like it's great training. You certainly learn a lot. And these companies have such smart people working at them. Is that where you met your co-founder at Wharton? Is that right?
Yeah. So, um, at Wharton and, you know, MBA programs have a great ability to foster friendships, uh, really quickly. You know, pretty much most MBAs are Type A folks, so they're very eager to meet other folks. And, um, I became fast friends, um, with Jeff Raider, Andy Hunt, and Dave Gilboa. Dave was complaining about losing an $800 pair of glasses in the seat pocket of an airplane before school, um, and how he had just purchased this iPhone. This was in 2008. And how the iPhone could do all these magical things, yet, you know, this pair of glasses cost more. Um, Jeff similarly needed to sort of replace the pair of glasses that he had, but was waiting to do so because glasses were so expensive. Um, Andy sort of posited the question, why isn't anybody selling glasses online? Uh, because this was a period when Zappos was gaining attention for selling sneakers online and Blue Nile for selling jewelry online, right? Categories people didn't think could be sold online.
It's such an interesting origin story because we often find that there's this intersection of the personal and professional when we talk to entrepreneurs. So this is where it came together for you. He said, 'Well, we can make eyeglasses more accessible.' I'm very familiar with the brand. Love it as well. I've had many, many pairs, lost one or two. And I think that's good for the business too, in a roundabout way. But let's talk, for those, I mean, not everybody's familiar perhaps with the business from a scale and a scope and a size, you know, your online eyeglasses, but talk a little bit about the business model and where you are at today with stores and reach and countries and all that great stuff.
Uh, sure. So the whole premise of Warby Parker is to provide vision for all, and we mean that literally and figuratively. Literally, how do we provide the tools to enable people to see, um, and figuratively, how do we serve as an example of a company that does well and does good in the world, and hopefully we inspire other entrepreneurs and other executives to run their business in a similar fashion. So, um, we sell glasses, and now we also have expanded into contacts and provide eye care through, um, primarily comprehensive eye exams. Um, but our eyewear is a fraction of what it would cost elsewhere. So $95 instead of, you know, $400 or $500, right? And that starting price at $95 includes prescription lenses, um, that are impact resistant, that are thin, that have, you know, all the coatings, anti-reflective, anti-scratch. And for every pair of glasses we sell, we distribute one to someone in need. And we've now distributed over 15 million pairs of glasses to people around the world and even here in the US. We started online, but we've opened stores. We now have roughly 270 stores across the US and in Canada.
And so that was a big evolution for you, right? I mean, moving from an online-only... How did it come up that you wanted to have physical stores, or was that always part of the plan in some way, shape, or another?
The strategy was always to have direct relationships with our customers because if we were designing our eyewear, if we were producing it, and we were selling it direct to the customer, then we could effectively sell it at wholesale prices, right? Because we weren't wholesaling our product to a retailer who was then marking it up three to five times. So, um, those direct relationships were always sort of paramount to the business model. Um, now because we saw this opportunity in e-commerce, um, and when we started, you know, less than 1% of glasses were sold online, um, we thought that selling online was the best way to reach customers, um, and was also going to be the least capital intensive. Uh, right, we were starting this business as graduate students. We actually started it with $120,000. We each put in $30,000 each. Um, and that's the capital that we needed to start Warby Parker.
