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How to y'all. I'm Elizabeth Gore. Welcome to the Big Idea from Yahoo Finance, the show that navigates the world of small business and entrepreneurship. All businesses start with one light bulb moment, and I'm going to take you on a journey with America's entrepreneurs. As the co-founder of the small business.funding platform. Hello, Alice. It has always been my mission to help ensure entrepreneurs have the tools they need to live the American dream. We're going to get between the spreadsheets with these operators to flow from their smallest failures to their biggest successes. So let's cowboy up.Today's big idea question is how do I make my brand stand out in a crowded industry? Our industry focus is eyewear. Joining me today to talk about the eyewear industry is co-founder and CEO of Warby Parker, Neil Blumenthal. He is also the reason I can see when I'm reading.With at least 2.2 billion people in the world having some form of vision impairment and 1 billion without access to glasses, eyewear is crucial and it is a massive industry. Revenue for the market in 2025, listen to this, is going to reach 151 billion. So Neil is literally a visionary and he loves puns like I do.Neil founded Warby Parker in 2010 with Andrew Hunt, Dave Gilboa, and Jeff Rader with the goal of making affordable and fashionable eyewear for consumers. What started as a small e-commerce eyewear business, Warby Parker hit their first year.sales target within 3 weeks of launching. 15 years ago, I would love for every business to do that. To grow this quickly in such a dominated industry seems unfathomable, which is why I am so excited to have Neil join us today to tell his story.Neil, I cannot believe you we were here together. We've known each other for 10 years, 15 years. Yeah,

it's wild and it's super exciting to be here.

Well, thank you. And you know, something you and I have in common is we were both humanitarian public sector and then jumped to the private sector. I mean, does that seem like a lifetime ago or yesterday?

It does feel like yesterday, but yeah, it's a complete lifetime ago, but I learned so much that helps me every day at work. I know you might have shaped who you are. Well,

I mean, I would say the most entrepreneurial people I've ever seen or someone trying to work in a refugee camp, right? It's, it's, I think it made you and I super scrappy, right? And I have a thank you note. I'm wearing your glasses. I mean, I turned 45 and couldn't see anymore, so I actually got to become a client for the first time. But no, seriously.You know, you, your, your big idea was to break into one of the most dominated industries. I mean, I mean, walk me back to what was that inspiration.

Yeah, so kind of similar to what you were just saying, you know, starting in international development, I was working at a nonprofit social enterprise that would train low income women all around the world in places where people are living on less than $4 a day, um, would train them to start their own businesses, giving simple vision screenings and selling glasses in their communities, and I would have to source these glasses and I would visit the factories where they were made andAnd here on production lines where I was sourcing glasses for people living on less than $4 a day, 10 ft away on similar machinery were some of the biggest names in fashion, Lan Vaughn, Marc Jacobs, and these were being produced and being sold in Europe and the US and it didn't make sense that glasses were so expensive right in the US and elsewhere when the cost to produce them, didn't justify it. Um andI had been talking with a few of my business school classmates, one of whom had just bought an iPhone because he had and a pair of glasses, and the glasses were more expensive than the iPhone.

Oh my Lord. Sowhat was the differentiator? I mean, I mean, here's this billion dollar industry and you and your college mates who you are still working together today said, you know, we can break in with all this money we don't have, by the way. Yeah.

You know, I think the best business ideas solve real problems, and this was a problem for us that you'd walk into an optical shop, get excited, um, and walk out feeling like you'd been ripped off. Um, and here we could design the frames that we loved and sell them as a fraction of the price at $95 instead of $400 including prescription lenses. And we started working on this at the time that e-commerce was really starting toTo explode. Yes. This is like 2010. We launched in 2010. Amazon certainly was around. Zappos was starting to gain attention for selling sneakers and footwear, Blue Nile for selling engagement rings and jewelry, right? And footwear and jewelry were categories that people initially thought couldn't be sold online. But so there was this whole trend of, hey, likeYou know, e-commerce is the future. Everything is going to be sold on there. So we thought that, you know what, if we design the frames we love, we produce them, we go direct to our customers online, right? We can cut out the middleman, right? We don't have to wholesale a product to aRetailer that then marks it up, you know, we could sell it for a fraction of the price and it would be the same quality. So that was the idea. But

didn't youget at first, I think you and I were getting a lot of nos in the early days because folks were like, I have to try them on. Wasn't there kind of a we got a pivot

here. You know, you and I have always spoken about this, about these entrepreneurial journeys that are really emotional roller coasters. tears.Where there's moments where you feel so smart and then moments where you feel like you're the dumbest person on the planet. Well, we started to tell all of our classmates that we were going to sell $95 glasses that would typically cost $400 and they were like, brilliant idea. And then we were like, We're going to sell it online. And you would see their facial expression change, but they would still be very nice to us and they'd be like, Oh, that's that's nice. That's a good idea. we'd be like, That's sweet. Right.So then we would push them a little bit harder and be like, Hey, look, you know, would you actually buy them online? And they're like, uh, maybe, but I really like to try them on first. And right as you are getting feedback and you hear it again and again, it's like, we got to solve for this. And that feedback was so valuable.Because it inspired us to go back to the drawing board and we came up with this idea of a home try on where we would ship people 5 pairs of glasses. They have 5 days to try it on at home. If at that point there was a pair they loved, we would put in the prescription lenses and send it to them. So we still have that home try-on program today and it's on our website. And I think that if we didn't have that in the early days, we would not have been as successful as we've been.

Yeah, I mean, the pivot is real, right? And then, and then you, here comes storefront. So I think you have 300 now, is that right?

Yeah, we have roughly 300 stores across the US and Canada. It's been really fun to open these stores because they're sort of, you know, great expressions of the brand.And it's where the action is, right? That was also a very organic process. So when we launched, we were fortunate to be featured in Vogue and GQ and got a ton of press because it was newsworthy that there were these beautiful glasses being sold for a fraction of the price.And we ran out of inventory of home try on program. It was, it was madness. We were literally in my apartment and with my co-founders, and we were debating what do we do? We're about to run out of inventory. We had no sold out functionality on the website. As we were discussing it, Dave's cell phone kept getting ping because he had said where he'd get a text message every time we got an order. I said, since we've been discussing this.So we had to quickly call up um our software engineer who we had contractor like, Hey, you've got to shut everything down. Like we've got to figure out how to have sold out functionality because this was also the days before Shopify. So you had to build all the stuff from scratch. But what ended up happening is, so we suspended our home triumph program because all the glasses were out with customers. We had to wait for them to come back.Uh, people start calling up and saying, hey, um, I want to try on your glasses, um, but the home, they're not available for your home try on. And so we said, well, um, if you want, you can come to my apartment. Um.

Listeners, please don't do that. Do not have strangers come into your apartment. Please go ahead.

We invited 5 customers to come into the apartment. We laid the glasses on the dining room table. We had people check out on Dave's laptop and you know it was a bizarre experience, but sometimes bizarre experiences get people talking. And one of those 1st 5 people I remember vividly was in Scrubs.Because he was a doctor at the University of Pennsylvania. Um, and suddenly we started over the next few weeks seeing a bunch of orders coming in from email addresses in which people at the hospital at the University of Pennsylvania.

Oh, just word of mouth from him.

We thought, huh, yes, this is a bizarre experience, but it must have been pleasant and interesting enough to talk about that it's leading to.and driving sales. So when we opened a proper office after we graduated school, we moved back to New York. We looked for an office that was more like in a sort of commercial residential area and we dedicated a portion of the office to being a store. So we had this showroom, people would come in, try on the glasses, order um still through our website, but suddenly we were doing likeOn track to do $3 million of sales through our office. So that gave us confidence to then do pop-ups and eventually open up stores. And as the stores did better and better, we just started opening up more and more of them. You're up with it. Yeah, well, it's always so energizing meeting with our teams who are super talented.

It's, right? They're the ones with customers every single day. There's a lesson in that. I mean, what would you tell our small business owners aboutGetting customer feedback through your employees.

Yeah, it's it's critical and your employees are your brand, are your team, right? You're, you know, either you're living your values as a team or you're not. You're either an authentic brand or you're not. You're either making customers happy or you're not. And um right, you should be soliciting feedback.24/7 and then working to get better every single day. And I think that's a strong part of our culture at Warby Parker.

So uh backing back up, I always like understanding how did y'all finance the company in the beginning?

So we bootstrapped it. Um, we

had yourown money.

We usedour own money. we each put in $30,000. So there are 4 of us, we started with $120,000 and that was enough to purchase ourInitial collection, so get some inventory of frames, and we're fortunate we are able to pay for the lenses on an as needed basis. Um, so we had our product to sell, then we needed a place to sell it. So we also paid to build our website um and then we need to let people know that we existed. SoWe hired a PR firm because we knew we were launching a fashion and lifestyle brand, so we needed to get the word out, um, but also in a thoughtful way, because you know launching, I think of fashion brand is different than launching, you know, a services company or you know a fast moving consumer good type.

Now that sounds very classy, but if I remember correctly, you were stealing pens and likeThe truth. Let's

hear it. Absolutely. Well, the question is always like, how do you spend as little money as humanly possible, right, to give you more confidence to continue to invest in your business. Um, and I thought it would, there's so many pens in the world that I'd be crazy to go and buy pens. So we would often take pens from our friends when they weren't looking, but also TD Bank gave you free pens. So anytime we went intothe bank or we're walking by it, you know, we would just grab some pens. So thank you.

So Carolyn and I we always took them from hotels and then the little notepads. So our team members would have notepads from like 6 different hotel chains. But that's what you have to do, right? You have to be frivolous, you know. And do you um would you recommend, I mean, that's a really big risk. I mean $30,000 at y'all's age.At that time, but do you like that y'all self-finance? Would you recommend that path for other small businesses?

I think it depends on how much capital you need and how much capital you have. So for us, it was great because it ensured that we had more ownership when we eventually went and raised capital and especially launching a business with 4 people, right? The ownership was split, um.You know, in, in 4, but more importantly, it creates discipline, right, where you're going to be really frugal, you're going to think 10 times before spending any money. Now, there is that old adage you need to spend money to make money, but you need to spend it smartly and strategically and when it's your own capital, right, you end up being a lot more careful than somebodyelse's.

Very true. Neil, hold that thought. We have to take a quick break and we'll be right back on the big idea.Welcome back to The Big Idea. I am here with Warby Parker, CEO and co-founder Neil Blumenthal. We have what we call the dirty unicorn, and this is, you know, a monumental mistake that you really learned from and our business owners can learn from that. What what's your dirty unicorn?

You know, I, I think it was, uh, those early days where, um, you know, we were running out of inventory, um, we were um having trouble sort of keeping up with demand, and that is a high class problem, but it's a problem nonetheless, and it's sort of how do you handle those situations and what we always said was right, customer experience.Customer service is so important. So how can we be unbelievably kind, unbelievably sympathetic? Um if we made a mistake, how do you immediately apologize but also take action to correct it? And sometimes that means, you know, giving the pair of glasses away for free. Um, and you can earn, you write that customer loyalty. Um, so yeah, in those early days we lost.A lot of money from orders that we had screwed up, but customers are a lot more sympathetic.

But it's a learningprocess, right? And you said high class problem, but look, I love, love, love small business owners who are at the fairs on Sunday mornings, right? And if they've got 10 units and those 10 units are gone.Do they have a business card to get the next ones to get the next one. So running out of inventory is a real thing, no matter you know where you're at, right?

Absolutely. You either overproject and then have you allocate too much capital to inventory and then you could be in trouble or you have too little and your business is not growing and you're disappointing customers.

So other than the quality of your products, my favorite thing about your business is that you allI have an incredible social benefit model. So not only do you give a pair of glasses, but you are training individuals. Can you talk through the model for me and why did y'all decide to doit?

Sure. So from day one for every pair of glasses we sell, we distribute one to someone in need, and that was important to us because as we were.Building Warby Parker. The question was, how can we build a company that we want to come to work to every day? And while we thought that it was an inherent good to lower the price of glasses from $400 to $95 for example, um, we thought that we could do more to have benefit. um and there'sbillion people around the planet that don't have access to glasses.

So a billion people don't have

to. It's crazy and have been around for 800 years, right? So we're failing as a species if we're not making sure that this technology is available to everyone that

needs it at a time when there's a lot of vernacular that businesses should just be there for a profit no matter what. And you all have this model of giving back. I mean,Do you think it is actually, I'm leading the witness here, but advancing your business and profitability by doing this model?

Yeah, you know, we look at it a few different ways. One is that we absolutely think that this helps us attract and retain the best and the brightest, um, so that helps just make theThe business thrive, right? Because the business all comes down to people. Um, you know, we do think that this engenders customer loyalty and elevates the brand. That being said, I'm under no illusion that this is not the number one reason why people buy glasses from us, right? Like when most people are deciding.To buy a pair of glasses, they're first looking at the design. Does this look good on my face? Then how much does it cost? You know, then, you know, is it convenient? Is the service good? And then lastly, like, hey, what does this pair of glasses mean in the world in terms of environmental impact, social purposes.

Right.The other topic right now going around is just tariffs, and you are a supply chain company. I'm just curious, is this affecting y'all and your and your thoughts or advice to other business owners as they think about this?

Yeah, so, you know, I'm often speaking to lots of other CEOs, lots of other board members of public companies, and the new US trade policy.and tariff regime is impacting everybody, right? Um, when it costs more to purchase something, right, those costs are going to come out of corporate profits. Those are going to result in higher prices and consumers. So as I speak to lots of companies, what they're doing to mitigate these increased costs for them is they're planning on raising prices.They're planning on cutting corporate spending, and now they're putting scenarios in place to see if the projections that they had for the year, you know, might be overly optimistic, right? Prices are going to go up, if companies are spending less, right? That could have downstream effects on the economy.Um, and particularly in an environment where also the federal government might be spending less overall, um, it's leading a lot of executives to sort of rethink their annualplans.

Right. Yeah, it's a time to be very focused, right, and listen, and so on. Now listen.Our big idea question of the day, and I would just love your three pieces of advice. How do you break into an already dominated industry?

My advice to you aspiring entrepreneurs is, yeah, identify customer pain points, you know, look to industries that are large because it'sIt's always easier to grow a big business in a in a bigger market. Um, and then, you know, if there are sort of dominant players or lots of regulations, sometimes that can be your benefit because that means that it's harder to operate. So, um, you know somebody that isUh, working harder and being more thoughtful can win in thatenvironment.

Amazing. Well, are you ready for your double pun? Thank you. Thank you for being a visionary. Thank you for your insights. You're just the best. Thanks for coming on the big idea.

Thank you. I love puns.

At the end of each episode, I like to give a shout out to a small business who is doing great work. And y'all, something Neil and I have in common, we love Mezcal. So today, I'd like to shout out one of Neil's favorite small business brands, Aqua Magica. Aqua Maica is a New York-based Mezcal brand started by a Mexican American that produces its product through traditional methods in Oaxaca.The agaves they use are sourced exclusively from small farmers in San Juan. So not only are they providing mezcal made from the best ingredients, but they are also investing in the future of the local community. You can check them out at aguagicca.com and I will be drinking this tonight.Thank you to Neil for coming on the show and thank you for joining us. We hope you learned a lot. This has been the big idea from Yahoo Finance. Make sure to scan the QR code below to follow Yahoo Finance podcast or check us out at the Big Idea wherever you get your podcasts.And if you follow on Amazon Music, just ask Alexa to play the big idea. You can also come say howdy to me on any of my social channels at Elizabeth Gore USA. I'm Elizabeth Gore, and as I'm a grandmother has always said, hold your head up high and give them hell. See you next time.

This content was not intended to be financial advice and should not be used as a substitute for professional financial services.