Inside Warby Parker's Killer Customer Experience | Tony Robbins Podcast

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today [Music] in this episode of the Tony Robbins podcast we're bringing you back to business mastery where Tony recently led a panel discussion with the business leaders behind some of today's fastest-growing companies this time you're going to hear from one of the founders of a company that changed the eyewear business forever how did you get your pair of glasses was it from a retailer an optometrist how much did you pay the process of purchasing eyeglasses has always been two things expensive and inconvenient on average pair of glasses cost nearly three hundred dollars but before you

even shell out your money you have to find a reputable eyeglass retailer sift through tons of unfashionable and unflattering pairs then finally place an order then play the waiting game until that pair was ready it's a real pain point for a lot of people and that's exactly why for friends at Wharton Business School decided to start a business that did something about it Neil Blumenthal David Gilboa Andy Hunt and Jeff Rader launched Warby Parker in 2010 the premise was pretty simple offer customers high quality eyewear at affordable prices and establish a convenient direct-to-consumer model so

that customers could get glasses anytime anywhere but what made this company so special was how focused they were on perfecting the customer experience and the massive amounts of research and experimentation they did to find that sweet spot in this episode you're going to hear from Neil Blumenthal on the vision behind Warby Parker why it was so critical for them to optimize every single dollar they put into that company and the tools and strategies that help them build Warby Parker into a billion dollar business thanks for joining us thanks for having me tell us the story

how this came about very few people know the story I know your clients do customers do but many people don't when I was talking to them and I think it's fascinating would you please share with us sure well I think the best businesses solve real problems and this was a problem that three my buddies and I had where we'd walk into an optical shop get real excited about a pair of glasses and then walked out like we got punched in the stomach because how many people have paid over a couple hundred dollars for a pair

of glass that's a lot of people right and so you've all had that feeling last time I checked glasses were invented eight hundred years ago and the last time I checked it doesn't have any rare earth metals like an iPhone right and yet here the costs more than my iPhone so we thought well there's got to be a better way that's really well so Jeff Andy Dave and I were graduate students we were getting our MBAs at Wharton Dave had just lost a $700 pair of glasses in the seat pocket of an airplane that was

a painful day for him and we were sitting talking in the computer lab Dave was telling a story gif similarly had a pair of broken glasses and as a full-time student now wasn't going to pay to replace them and Andy was wondering like why aren't people selling glasses online where you have Blue Nile selling engagement rings you have Zappos selling shoes like at some point somebody's going to sell glasses online and I had previously run a non-profit for about five years that would train low-income women in the developing world to start their own businesses actually

giving eye exams and selling affordable glasses in their communities in places like thank you and these places like in Bangladesh and India and sub-saharan Africa and Latin America and there you really see the power of a pair of glasses transform somebody's life but I would go and visit the factories where the frames were manufactured and here I was producing glasses when I was at this nonprofit for people living on less than $4 a day and then literally ten feet away on the next production line I would see some of the biggest fashion brands that you

can imagine Marc Jacobs Milan bond so there was a big disconnect between what it costs to produce eyewear and what it was being sold for to folks Wow so so from there how soon after that did you guys get in the business and what were some of the stages that you went through so we had this quick conversation it ended because we all had to run to class and then the day sort of got away from us and I had this feeling in my stomach you know when you have an idea and you just you

feel it in your gut and having trouble sleeping I was opposites now two in the morning and I fired off an email to Jeff Andy and Dave and I was like hey guys like that was a really interesting conversation I think we should continue continue it tomorrow and at 2:01 Jeff responded and at 202 Dave responded and then Andy responded and we all had that same sort of feeling in our gut so the next day after class we decided to go where the most important decisions are made a local bar and we sat over a

pint of Yuengling which is a local beer beer in Philadelphia and we just started talking more and got more and more excited and we promised each other two things one was that if we're gonna do this we're gonna bust our butts and even though we had each had demanding jobs that were you know way more than nine-to-five jobs that we're all consuming we knew that starting a business was going to be very very different and the second thing that we promised each other is that we're gonna remain friends throughout the process and and and thankfully

we are still friends so February will be seven years but I guess nine years since we start thinking about the idea and started working on it so you know I think one of the things that we realized was that there's a lot of smart people that have started very successful businesses and a lot of smart people they have said hey we're gonna remain friends throughout the process but who have subsequently right become enemies and those are what movies are made of we've all seen that documentary 1 or 2 times you know for us what we

decide to do is that we were going to follow up that promise with action and I know it sounds cheesy about what we would do when we were getting started is that on a monthly basis we'd all back to the same bar and we'd sit across the table and we would do a 360 review Wow and we would literally have conversations to make sure that if there was any bit of tension which there should be right in businesses there a conflict that we aired them and we discussed them so that way it didn't simmer and

then explode so I remember explicitly there being one conversation where I turned to Jeff I was like when you shoot me a 10 page email 2:00 in the morning about my area of the business I want to reach through the computer screen and strangle you and and he looked at me he's like I'm I'm so sorry I I was just really excited about these ideas I want to share it with you and sure enough that's exactly what he was doing he wasn't checking up on me he wasn't worried that I wasn't doing the work he

wasn't worried that I didn't have enough ideas but as a human right like your immediate response is to be defensive and that conversation and these 360 reviews really set the stage for the culture at Warby Parker which is a lot about feedback and even one of our core values which is to presume positive intent because in that moment I wasn't presuming positive intense beautiful tell me so we promised that we were each gonna put in 25k and then we each said if we needed more we put in another 5k so we literally started the business

with 120,000 dollars which I don't know if you could do today we recently raised money the the valuations now over a billion dollars kind of kind of crazy your head where you guys started with is it sunk in at this stage I guess uh-huh it's kind of crazy I think what's probably more Crazy's being able to short share that story with others yes I hear which is incredibly motivating yes I think you know it was a very special moment in time and not necessarily a good time because this we started working on and in the

end of 2008 was really working on getting ready launch the business in 2009 we could launch in 2010 so this was right in the midst of the Great Recession and that I think helped clarify in our minds we have to provide value right a $95 product that would typically cost four or five hundred dollars but it also made sure that we were very very careful with cash so now that we're almost seven years in we finally buy pens and everybody would used to make fun of me because they say O'Neill like we gotta get some

office supplies I'd say go to TD Bank you get a free pen but but I think one of the things that and we take a page from the tech world on this is that how do you build a Minimum Viable Product and sometimes actually I think that minimally Viable Product gets corrupted in the sense that you know people just want to build something and quickly throw it out there to the to the public and we were building a fashion brand a lifestyle brand we were selling what is a fashion accessory but it's also a health

product so it couldn't be something that was just you know duct-taped together and had to be fully formed and and thoughtful but that being said we didn't have to go overboard what were the things that we really needed to do to see if it would be successful and in our minds it was have product to sell so we had to design some glasses and produce them we had to have a place we could sell them so website and then lastly we have to let people know that we existed so we were building this lifestyle brand

and we needed we knew we only had one shot to launch this brand and in fashion that's incredibly important so we hired a fashion PR firm and those were the three things that we invested in we didn't pay ourselves salary and when we were building the website for example none of us had a technology background but we knew that we could ask other people for help and that we could learn how do you build one and see are there pieces that we could do ourselves so for example some of the design of the site at

Wright in 2010 when we were launching the world was all about desktop e-commerce so we would literally layout each webpage on PowerPoint and then because we didn't have really money to hire developers to build a prototype we would print out those sort of sketches of each web page and go to our friends and say hey this is the homepage what button would you press out this is the gallery page what button would you press and we would do sort of this in-person user testing so by the time we went to a web developer to build

our website we had a real clear example of what we wanted which helped define the scope because when you have a tighter scope vendors will charge you less because there's less risk of scope creep so they don't need to build as much contingency and we also knew that we could better evaluate developers because we knew exactly what we wanted so we talked about the other day of you guys would call you and today people if they don't already have the software or an app people think they can't do it you take out a piece of

paper and you try something and you measure it um tell me you know so many companies I've seen take off when they finally found the irresistible offer you know obviously Tony Hsieh did that of Zappos you know change made it a billion dollar company by just coming up with the right offer right you've seen the same thing iTunes with $0.99 how much did what was your ears the small fur is there an irresistible offer and how did you find it and how is it played out um you know I think that it's you know tapping

into something that we experience as those customers being frustrated and you know having a pair of glasses the same quality the same design that you'd want for four or five hundred dollars but sell it for glass now the question is how do you do that well we thought by building a direct-to-consumer business right we would be able to bypass the middleman bypass the other retailers right so you have to wholesale other businesses have to wholesale their frames then those retailers mark it up three to five times we were going to give that all back to

our consumers and likewise because we were developing our own brand we didn't have to license these other brands and then pay a ten to fifteen percent markup on that so when we looked at this industry we found that it was dominated by one particularly large company company called luxottica they owned brands you may have heard of like Ray Ban and Oakley Persol Oliver Peoples Arnett they license a lot of big fashion brands like Ralph Lauren and Chanel and Prada and Dolce & Gabbana they also own a lot of optical retailers like LensCrafters and pearl vision

and sunglass hut and Sears Optical and Target optical and they own the second largest vision insurance plan in the country I met so some domination so when we saw this you know at one moment you get really scared that there's this behemoth right this is the Lotte Goliath out there but then you get excited because now there's this David versus Goliath story that I think helps from a press a narrative standpoint but more importantly these market dynamics are in our favor because they keep prices high and they take advantage of consumers where we can come

in and charge way less and develop a far greater customer experience for our customers so exam pose overcame the challenge of how do you sell shoes for ladies they can't try them by making an offer that looked like it was suicided we're gonna take as many shoes as you want and we'll pay for the shipping and if you don't like camel shipping back you know Tony Hsieh was betting on the fact that women love shoes if they don't fit they'll fit in the future and the mindset of many women right change their life for you

I noticed you have you know a TOMS shoes came up with the offer right of you know buy one and we'll give one you see they've combined some of those elements I saw you have you know like five pairs of glasses for five days and then also you do share you do make a pair for other people can you talk to us a little bit about the offer sure so is that new or is that is that what you've had all along front from the get-go right so when you're building your business as we've all

experienced right it's a rollercoaster of emotions there are moments where you feel like you're the smartest person in the world and there are moments where you feel like you're the dumbest human being on the planet and when we were building Warby Parker we'd often ask people hey would you buy glasses online and many people would say no and that was those were those moments when we felt really stupid and they said what we want to touch and feel the glasses and make sure they fit so given that we were building sort of this technology company

even though it was also this fashion brand we thought there's got to be a technological solution so we found some pretty cool technology where you could upload a photo of yourself and virtually try on glasses and then we started to test it ourselves and we're like you know what this is okay but it's not really there yet yeah so it then took some time to reflect to figure out hey there's got to be some other way what if we actually sent people the frames to try on then they can decide which one they want to

buy at that point well put in the prescription lenses and send it back to them and that was one of those aha moments and we loved it because it overcame this major customer hurdle where people want to touch the glasses and try and make sure they fit but it also solved this issue there's potentially financial issue where we were gonna offer free shipping and free returns and that was just because we believe in treating customers away we want to be treated and we didn't want to pay for shipping and returns and we want to make

it as easy as possible for people to buy so by doing this home Tryon program we also figured we reduce return rates and within eyewear if somebody returns a pair of glasses you have to basically throw out those lenses because the likelihood that somebody has the same frame the same prescription in each eye the same pupillary distance right it's really rare so this home Tryon program became a big part of Warby Parker and when we launched we got featured in vogue in GQ and GQ called us the Netflix of eyewear it was great and the

company took off like a rocket ship we hit our first year sales targets in three weeks sold out of our top 15 styles in four weeks [Applause] it was mayhem we had a waitlist of 20,000 people and you know to your point about the offer the other thing that we committed from day one was that for every pair of glasses we sell we're going to distribute one to someone in need and that was thanks and that was because as we were thinking about sort of building this business we knew that we would be able to

help people in the u.s. by bringing down the pair of glasses ninety five dollars but knew that there were roughly 700 million people around the world that don't have access to glasses and what does that mean to their ability to reach their potential and as we were thinking through this we thought well we could commit to donating a percent of revenue or a percent of profits but then we thought well what if we're not in control of the company anymore that can be easily manipulated to sort of be sub optimized rather than optimize the other

thing that we thought about is that actually it's not about the number of dollars either high or low it's about getting glasses on the faces of people that actually need them so that's why we made the commitment now we did this because we want to work at a company that we were excited to come to work every day where we didn't want to roll over and hit the snooze button when we unmeant a lot of time doing focus groups and surveying our customers and just observing them we knew that the number one reason why people

buy glasses is not because the company has a social mission so actually a lot of people that buy Warby Parker glasses have no idea that we've distributed a couple million pairs of glasses to people in need and that's because we don't think thank you we don't think that that's the number one reason why they buy glasses so we lead with what the number one reason is which is fashion and design then price then quality and service and then our social mission and most people don't realize it until they get their pair of glasses they open

the gift box they open their case they get their glasses and there's a little car that says thank you for buying Warby Parker's and by the way a pair has been will be distributed to someone in need out of the standard offer yes in seventh hand for that for sure I've been a skier to golfer you know try five on for five days how you're sitting those without the lenses then is that what I'm hearing exactly and then what percentage of those people end up getting all five pairs of glasses I'm curious very few yeah

I wish it was a very high frankly but we don't need it to be for the business to be super successful one of the things is that people in the US tend to buy a new pair of glasses once every two years and while people buy from us far more frequently than the average we didn't also we didn't want to build our business on radically changing customer behavior because we know that that's really hard and it's not necessarily predictable however if we could build a stable business that just delivers a better service that still is

in line with the current market dynamics fantastic that's great and then you know if those dynamics change and we change it then it's just more and more upside for us right the horse of the direction that's going three questions real quick and then we'll bring in our third and we'll do them all how about yes so so first off I've listened to all a Tony Robbins stuff and I'm most excited about your interview today fantastic thank you how did you go from I have a start-up and we funded it ourselves and how did you go

through that first round of financing to really take care of the nerves of I'm not ready to let this go so we were fortunate in that we had enough that one hundred and twenty thousand dollars enabled us to launch the company so then when we launched we had market fit immediately right we had these press pieces so by the time we went to investors which was almost a year later we said Ike hey like we've effectively dearest's this business we have a brand that resonates we have product that people like and we have sales that

show that we're on this growth trajectory so we were in a position of power and leverage where we were able to basically not so much dictate our terms but there were certain things that were really important to us so for one we want to make sure that we had control of the Board of Directors and that we as founders also our founders shares had more rights than the investors in that there couldn't be a change to the board without a supermajority of our founding shares that there couldn't be a sale of the company so we

were I think very deliberate in what were things that were non negotiables for us and one of the things about fundraising is that terms tend to get worse over time so the the the best terms that you can establish upfront the better because you can use that as a template in later funding rounds so that was something that we were sort of thinking about we also try to bring in investors early on that where early stage investors because we wanted the big guys to still be out there and compete and fight for us and in

the future because sometimes if you bring in the big guys too soon then when you're raising your next round if they don't if they're not enthusiastic and perhaps leading that round that could send a signal to the market that maybe not everything is that's kosher as it should be so that's just one small risk that we wanted to avoid thank you thank you next how about gentleman right here are this lady I'm sorry right over here on the right side I'm Poonam and I'm from Calgary Alberta Canada [Applause] awesome and I just got these and

I've experienced a lot of buyer's remorse right now because I did not spend a hundred dollars on them I wish I knew about you so I just want to clarify you're saying you don't sell the brand name glasses right so my question is what do you feel is the consumer trend now because it seems like as consumers we used to be really brand conscious we wanted the Ralph Lauren's and the Pradas and our bags and you know and especially fashion accessories but even with cars and it seems like what you're doing and an even Airbnb

to some extent is you're sort of bypassing that right and where do you so where do you can you talk to that and also where you think it's going never got me a I was just reading the other day that you know Millennials don't want the name on there anymore right and there's like they're in such economic trouble because of that see chain we all talked about this yesterday right making sure like for the cultural shift because those are things that could disrupt your business how do you look at that sure so I first say

that people are more brain conscious than ever however the attributes that are important to them have changed a little bit so having a big flashy logo on a pair of glasses for example isn't as attractive as it was a decade ago and particularly with Millennials one of the things that we did early on is that we did a survey before we launched the company where we sent people pictures of glasses some with logos some without and we asked them how likely are you to buy this pair of glasses you know how good what how on

a scale of 1 to 10 how good quality do you think these glasses are would you buy them and in general most people did not want the the branding and the logos on their prescription glasses and however they did think that the ones with the logos were of higher quality so that's something that we are constantly grappling with both because of our price point and because we don't have a lot of branding on our glasses because there is this perception right that price equals quality and that logos are markers for quality so that's something that

we think and work hard to sort of counteract but the other thing that we found was that in particular people of the in the creative class that for us were going to be real influencers building a fashion brand so the editors at fashion magazines and stylists and so on they were even more extreme in that they didn't want logos everywhere so that you know led us to not wanting logos everywhere and was actually confirmation of something we felt ourselves but I would encourage people to think a lot about what are the attributes by which you

care about a product and that has changed there's a great HBS professor youngmee moon who's done a lot of work on millenials and she describes buying laundry detergent and a lot of us grew up for example buying tide and we bought tide because we thought that it washed your clothes the best now right I think we all believe that every laundry detergent we buy will wash our clothes right most products will do what they say they all will do so when that's the case you start to make decisions based on other attributes the design of

the packaging the environmental impact how that company treats their employees for example those are all brand attributes and that was something that we spent a year and a half thinking about when we are building Warby Parker because right a brand architecture is your reason for being it's your mission then we figured out hey what do we name this company because for us we are building this brand that stood for fun creativity doing good in the world we felt that writers often best represented that we thought that there was this inherent link between eyeglasses and reading

and learning so we went to inspiration of different writers and the name Warby Parker actually comes from two early Jack Kerouac characters Warby pepper and zag Parker and we actually went through 2000 different names before we found these characters and it was again one of those aha moments so bringing matters more than ever and but those attributes are now sort of there are more of them and experience I know it's a buzz where these days experience experience experience but it really does matter right and it's about a holistic experience so our brand is not just

our product it's the moment somebody hears about Warby Parker and we hope that they hear about it from a reputable source either from a friend or from an expert like GQ or vogue and how we launch when they go to our website or into one of our stores we now have 46 stores that that that experience is easy and fun and convenient that when we say we're going to ship you your product in five days that you get it in four days right and we're constantly exceeding expectations that when you come into our store you

need an adjustment that that's a great experience that if you want to return it it's easy you don't it's not like Amazon where a phone number is hidden somewhere and you can't get somebody on the phone somebody calls Warby Parker human being answers the phone within six seconds and that that's the brand and that's the brand experience so I think we need to really expand our thought on on what a brand is cool thank you thank you you know both of you both both these organizations are so focused on giving an experience we all hear

about that but what I hear with both of you is this constant actual direct communication with your clients finding out in advance what do they really want as simplistic as that sounds it gets left out of most small businesses third question yes ma'am right here in the white sweater first of all you have a brilliant product my question is in a market where you see retail stores going more to online you guys started online and then you went retail and you went retail in like major places the Design District in Miami for example or actually

the art district spent a lot of money when that the trend has been the opposite of that what made you guys decide to go into ba you know to into the street it was very much consumer driven so when we launched as I mentioned right we have this big spike in sales literally within 48 hours we had to temporarily suspend our home Tryon program because we shipped out all the inventory so we didn't have glasses to satisfy the people right exactly a champagne problem and people start calling up and saying oh can we come into

your office and we like we're working out of my apartment but you're welcome to come here and literally that's what we did we invited five night [Laughter] we literally invited five people to come into my apartment we didn't want to invite a hundred people because we thought if this was a bad experience that this would tarnish the brand but we figured we D risk it and we test it with five people so the first store was my timing room table where we laid the glasses they're our cash register was my co-founder Dave's laptop so I

remember those folks came in trying on glasses checked out using just our webpage no point of sale and the first person was a medical resident and he was in scrubs and we just created this this great connection and first it taught me that vulnerability is key to relationships and brands can create relationships with their customers just as human beings build relationships with other human beings so somebody coming in and seeing us responding to customer emails on our couch right like how often is it that you meet the founders of a business and you get to

see sort of the inner workings of it and the second thing was that there are some people out there who want to touch and feel the glasses so when we opened up our first store I'm sorry our first office it was in Union Square in in Manhattan Union Square has a lot of public transportation we want it to be easy to get to it was a loft space with great southern facing windows so it had good light and we dedicated about a third of the space to having a store and suddenly we were doing a

couple million dollars of sales through our office and it was kind of crazy and we kept doing these experiments on how do you display glasses do you do it on a table you know what that's not as convenient as being at eye level and putting shelves on the wall Oh people prefer full-length mirrors versus head and vanity mirrors and some of these seem like really obvious learnings but as novices right it wasn't obvious to us and the sad thing is that most optical stores don't have full-length mirrors this was something that we discovered within like

five minutes of our business and I think that goes to building a culture of learning and testing so once we were doing a few million dollars of sales within our office we thought well we could probably do even more business at ground level so suddenly we did a pop-up store again this was part of our process to de-risk what is a very expensive investment right a 10-year lease and over a million dollar build-out so we did a pop-up store that was successful we bought an old yellow school bus ripped out the interior and put oak

shelving in it and have this beautiful mobile store that went to 15 different cities and then that's really cool because we we called it the class trip and you could buy a sweatshirt you could buy a mug if you were one of the kids that used to hang out in the back of the bus you could buy a flask each everyone that bought a pair of glasses off the bus that came in a brown paper bag like it was lunch it was a pretty cool brand experience and while it wasn't our intended effect when it

was done suddenly we had sales data from great 15 cities and three locations in each city we knew exactly where to open up stores based on where the bus performed best so our journey into retail I would say was consumer driven and then we did a lot of testing to de-risk it as much as possible tremendous experiments like we talked about yesterday give me hand beautiful beautiful job the Tony Robbins podcast is directed and hosted by Tony Robbins and Mary Burke a anti org is our editorial director an occasional host the podcast is produced by

Carey song and Teller Culbertson Jaime carvajal and Adriel de la tarde are a digital editors special thanks to Diane Adcock for her creative review copyright Robbins Research International [Music]