Source: WSJ, May 2011
Two years ago, the founders of eyewear company Warby Parker entered their idea in a business-plan contest—and lost.
This spring, the 15-month-old New York venture had to fight off would-be investors jockeying to write it a check. One firm was so desperate to invest in the company that its employees showed up at Warby’s offices four times in 24 hours, following up a dinner with offers of free breakfast and lunch.
Warby Parker began looking to raise money for working capital this spring. Its four founders dreamed up the company, which sells vintage-style glasses, while working on MBAs at the University of Pennsylvania’s Wharton School. They named the start-up after characters from unpublished Jack Kerouac writings and used their second year to establish supplier relationships and pricing.
They opened for business in February 2010, ultimately setting up shop in New York because they saw themselves as a fashion brand first and ecommerce second. “We found ourselves having more meetings with designers, photographers and editors in New York,” Mr. Gilboa said. “We think it is pretty hard to establish a fashion brand in the Bay Area.”
The $16 billion U.S. prescription eyewear market is dominated by the Luxottica Group, which owns multiple brands such as Oakley and Ray-Ban, as well as retailers LensCrafters, Pearle Vision and Sunglass Hut. Previous Internet start-ups like Framesdirect.com and Glassesdirect.com have failed to make much of a dent in the market.
Warby, which charges $95 for its glasses, is taking a page from online shoe retailer Zappo’s playbook by letting potential buyers try on glasses at home with free shipping both ways.
A little over a year after setting up shop, Warby had sold 50,000 pairs of glasses and was generating positive cash flow. Mr. Gilboa said 30 investors offered to put money into the company.
In the end, Warby turned away interest from Silicon Valley venture capitalists such as New Enterprise Associates, Sequoia Capital and Greylock Partners. Instead, it raised $1.5 million from seed-stage investors including First Round Capital, Lerer Ventures and SV Angel.”We will be standing there waiting for them if they want to raise another round of capital,” New Enterprise Associates partner Tony Florence said.