NEW YORK, United States — “We’ve always talked about building a brand for the next 100 years,” says Warby Parker co-chief executive Neil Blumenthal. “A bedrock of that is strong financial performance, in addition to building a brand that people love and has a great customer experience. According to our plan, we’re right on schedule.”
For Blumenthal and co-chief executive Dave Gilboa, strong financials mean profitability, which the disruptive eyewear company achieved on an EBITDA (earnings before interest, taxes, depreciation and amortisation) basis in 2017 for the first time since its founding in 2010. “It demonstrates that we have a successful financial model in place,” Blumenthal says. “And equally important, the discipline and ability to devise a plan and execute.”
On the heels of crossing that benchmark, Warby Parker has raised $75 million in a Series E funding round, led by asset management firm T. Rowe Price, that values the company at $1.75 billion, according to a source familiar with details of the valuation. Baillie Gifford, another asset management firm, also participated in the round.
The new money comes at a higher valuation: as recently as 2015, the company was valued at $1.2 billion (when it raised $100 million in Series D funding, also led by T. Row Price). It now generates north of $250 million in sales annually, according to market sources. Prior to the Series E, it had raised a total of $215 million.
Warby Parker has transformed the American eyewear market by offering a design-led alternative to old-fashioned and high-priced prescription glasses and sunglasses, employing more than 1,400 people and operating 65 retail locations across the US. Its direct-to-consumer model and innovative store concept serve as a defacto blueprint for both upstarts and stalwarts alike looking to course correct in the challenging retail market.
It plans to funnel the new capital into research and development as well as new technology. “When we look at companies that may be on the decline right now, especially in the fashion and retail worlds, we see a failure to innovate,” Blumenthal says. “Change is happening more than ever before in human history, and the medium through which we sell our glasses has changed dramatically.”
Not only does the company use SMS, live chat, email and phones to interact with customers pre-and-post purchase, but it also has a network of opthamologists and medical doctors that can review the medical records of their customers and issue prescriptions. “I don’t think we anticipated we’d be a pioneer in telemedicine,” he adds, positing that Warby Parker now plays as big of a role in the healthcare industry via prescription and medical services as it does in fashion, design and technology. (In-store, Warby Parker also offers a prescription check service.)
“I don’t think we anticipated that we’d have such a large fleet of stores, and that the fleet would be so technology oriented,” he adds. ”Products and services have now merged, and they need to be exceptional as customer expectations continue to increase.”
While international demand remains fervent, Blumenthal says there are still no immediate plans to expand abroad despite the “massive global opportunity.” For one, the company is still growing in the US — faster in 2017 than in the year previous — and a third of global eyewear sales are still generated here. There’s also the headache of regulations associated with selling a medical product across regions. “We want to build incredible holistic experiences that are the right representation of the brand,” he says. “Time and time again, we’ve seen peer companies expand internationally to chase growth only to underestimate the complexity it introduces, the mindshare that it requires and the capital it requires.”
At some point, however, Warby Parker will indeed look to further fuel growth, with a public flotation very much in the cards. “We see going public as a financing event...a mechanism for us to to continue to raise capital over time,” Blumenthal says. “Our goal is to remain independent, so the most likely outcome is an IPO in the next couple of years.”
Blumenthal says there is no explicit timeline in place, however there are indications that Warby Parker is readying itself for a public flotation that could happen as soon as one year from now, according to one source familiar with the company's fundraising. The company also recently invited lauded Harvard Business School professor Youngme Moon — who has been teaching her case study on Warby Parker to students for several years — to join its board of directors. (Moon is also on the board of directors of Unilever, Rakuten and Sweetgreen.)
“We are bringing on what we think are some of the best partners because of their long term focus,” Blumenthal says of its partnership with T. Rowe Price. “If we want to go public, we would assume that they would continue to invest going forward.”