Warby Parker

Eyewear With a Purpose

Sunday 1 June 2014, by Eduard Oliva, Víctor Martínez

A. The main facts about the activities of the company.

Warby Parker (WP) is a company that offers high-end glasses (sunglasses and prescription eyewear) with a boutique-quality and classically crafted eyewear. Its style is vintage inspired at a very reasonable price.

A few large companies dominate the optical industry and they have kept prices artificially high at $300 , reaping huge profits from customers. In WP they are determined to disrupt the optical industry by offering high quality and beautifully designed prescription glasses starting at $95. Such a reduced price is possible because WP’s designs are in-house and also because they sell glasses directly to customers, so it avoids licensing fees and retail markups.

The founders, David Gilboa, Neil Blumenthal, Andrew Hunt and Jeffrey Raider received $2,500 seed investment through the Venture Initiation Program of Wharton School at University of Pennsylvania and then in 2010 the firm was founded and headquartered in NYC. WP is still young company but in 2013 the co-founders raised up to $40 million in venture capital.

WP operates in United States through 3 retail stores allocated in Boston, NYC and Los Angeles and also 5 showrooms in Chicago, Philadelphia, Oklahoma, Nashville and Richmond, but almost all its sales proceed from the online website where they sell their products nationally, to United States and internationally, just to Canada but looking to expand to United Kingdom.

WP wants to grow as a company that makes a positive impact, serving as an example of a business that can excel at making profits while doing good. In WP they have developed a business model in which every decision takes into account all the stakeholders: their clients, their workers, their community and the environment. In particular, the company is partnering with NGOs to aid people in need of glasses around the world and it has become one of the few carbon-neutral eyewear brands worldwide. WP is a B corporation since May 2011, being recognized for its social impact and ethical commitment.

B. The Ethical challenges this company is addressing.

It is part of Warby Parker’s DNA to grow as a company that makes a positive impact. As such, the company addresses several ethical challenges. Even though the company is not able to completely overcome these challenges solely on its own, it makes an effort to contribute towards this achievement.

Principally, Warby Parker (WP) is determined to aid people on Earth who lack access to glasses. Nearly one billion people worldwide, 15% of the global population, cannot learn or work properly due to visual problems. In fact, glasses are one of the most powerful tools to alleviate poverty: they can increase one’s productivity by 35% and one’s monthly income by 20%. Typically, people do not have access to glasses because of their economical constraints or the underdevelopment of their communities. To address this ethical challenge, the company promotes the so-called “Buy a pair, Give a pair” business model: for each pair of WP sold, the company is committed to ensure that a pair is distributed to someone in need with the collaboration of NGO partners like VisionSpring.

More specifically, for each sale WP provides glasses and/or funding to its NGO partners. Then, NGO partners provide glasses and training to low-income local entrepreneurs to start their business and foster the development of their communities. Finally, these local entrepreneurs earn a living by selling affordable glasses to people in need. As a result, jobs are created and incentives are set to continuously provide glasses to community members in need. But most importantly, since these community members have the chance to decide whether they want glasses, they can preserve their dignity and avoid following the culture of dependence that often accompanies foreign aid.

Since the company’s inception in 2010, WP has contributed to distribute more than 500,000 pairs of glasses to people in need in 36 countries, to train 10,000 low-income entrepreneurs to sell affordable glasses and to create more than US$100 million of economic impact due to increased individual productivity.

Additionally, the company has an especial concern for the development of its employees. Being aware of rising social challenges due to health illnesses resulting from stress or the unbalance between personal and professional life, WP strives to create a stimulating environment where its employees can flourish. Monthly informal feedback sessions and quarterly 360º reviews are carried out so that workers feel responsible for one another’s personal and professional growth. Further, living wages are paid to all employees and >80% of their health insurance is covered. Consequently, the company has experienced more than 15% job growth rate and all fulltime employees participate in external professional development activities.

Finally, WP is also concerned about its environmental impact. To address this ethical challenge, the company is actively making an effort to devise and reduce the emission of greenhouse gases in its operations and purchasing carbon offsets accordingly. For instance, the company conducts several internal environment reviews in its inventory and value chain activities. As a result, WP has become one of the only carbon-neutral eyewear brands worldwide.

C. What makes you believe this company is really ethical and why you trust it?

The tremendous social impact caused by the recent economic crisis has raised concern about the relationship between business and society. Indeed, this has also been a crisis of values, and to some extent it epitomizes the prevalent tension between business and society that results in unavoidable ethical dilemmas.
A new generation of companies has been arising as an answer to the crisis that being ethical and profitable is not a contradiction. We position WP among these companies that aim at making a positive impact on the world going hand in hand with, and not against to, society.
In this line, we strongly believe that WP is a really ethical company because it addresses several ethical challenges of great importance that we already introduced in the previous section: poverty and development, the environment and other social issues. In this section, we rather focus on the reasons why we trust WP as an ethical company.

First, we trust the company because we trust its upper-management level. We feel that a necessary requirement for a truly ethical company is to have a moral-driven and trustworthy upper-management that can maintain the company on the right track. In WP this requirement is fulfilled because the co-CEO and one of its founders, Neil Blumenthal, is the former director of the NGO “VisionSpring” with which WP is partnering. Neil spent 5 years of his career providing glasses to people living on less than $4 per day. Provided his experience, we feel that Neil is a trustworthy leader that, in his position as co-CEO, can canalize his motivation and moral values across all the company levels. Moreover, we had the opportunity to meet Neil at The Wharton School, where we were convinced about his aptitudes as an ethical leader.

Second, we trust WP because it is an open and transparent company. Recall that, through its business model “buy a pair, give a pair”, WP makes its principal contribution to the world by partnering with NGOs in order to aid people in need of glasses anywhere. While the company could fulfill this objective alone and independently of any third party, which would provide the company more confidentiality and thus a better leeway to hide its CSR activities from society, WP chooses the partnership model as a signaling of its dedication to be ethical and transparent at the same time. The NGO partners monitor the company’s commitment and reveal its activities to society so that they can be judged.
Furthermore, in the company’s website, it is clearly detailed the process through which WP aids community members in need of glasses, leaving no doubts to customers about their involvement. It is also published the results of their contributions both in general terms and in specific cases where they focus on personal stories that illustrate the company’s care for individuals, which is also part of its values.

Finally, we trust WP because it its one of the few companies that has been awarded the B Corp certification. The B Corp certification is not just another way so that firms can show off their CSR practices. B Corps are a community of purpose-driven businesses aiming at redefining business and creating social value, they generate benefits for all the stakeholders and not just shareholders. The B Corp certification is issued by the American NGO “B Lab” and it requires companies to meet several strict standards based on social sustainability, environmental performance, accountability and transparency.
The B Lab is creating a movement of companies that encompasses an increasingly powerful agent of change. Hitherto, they have passed 24 laws around different states in the US to make legislations account for the social impact of companies, and they are currently working in passing 14 more laws.
We truly believe in this movement and we conceive it as an exceptional strategy to make true impact and change how enterprises are managed today. The fact that WP is part of it makes us trust in the company’s mission, vision and ethics. In the 2013 “B impact report” produced by the B Lab, WP scored above the median in accountability and transparency, worker relationships and community impact.

D.The possible challenges facing the company in the future and how you think this company may improve.

So far we think that WP has done an excellent job. The company has undertaken a proactive strategy, devising an enormous opportunity in a competitive industry while making a positive impact. The company is fully committed with its “buy a pair, give a pair” business model, which is grounded on transparency and solid credibility. Since its foundation, WP has successfully dealt with all the ethical challenges it had encountered, but as the company grows in size and impact in the upcoming years it will unavoidably face new dilemmas.

When we talked about the ethical challenges that the company is addressing, we did not mention the company’s devotion to its customers. To some extent it could be argued that WP is ethical because it aims at terminating the practices of an abusing industry that charges incredibly high prices to clients. We could say that WP gives access to more affordable high-end glasses to less wealthy people. These could be all valid arguments, but we should not forget what the actual business is about: achieving high profitability by cutting costs across the value chain activities. Therefore, it is not straightforward to determine whether these activities are moral-driven in addition to profit-driven, which is why we gave priority to other ethical challenges in the previous sections.
In our view, it is dangerous to use these arguments to support the company’s so-called “love” for their customers. If other competitors follow WP’s cost-saving strategy to compete in price, they could eventually use the same arguments to be promoting their ethics, thereby rendering them valueless. As a result, if WP wants to preserve its credibility to customers it should go beyond the current approach. Indeed the company is already making an effort to make the buying experience more enjoyable, but this purely aims at building customer loyalty. Instead, we propose that the company should make a step forward in its proactive strategy by publishing industry reports that study and go beyond in details about how abusive the industry practices are with pricing. Informing society and fully aligning with social interests would definitely consolidate the company’s credibility.

Another challenge that WP might face in the future is the environment. In the 2013 “B impact report” from the B Lab, the company scored below the median in environmental impact. In particular, the company scored 0 in the use of renewable energy and recycling materials. WP has had to purchase carbon offsets in order to become a carbon neutral eyewear brand. However, as the company grows and the volume of its operations increases, it will become increasingly costly to compensate for carbon emissions by continuously relying on carbon offsets. Consequently, we think that the company can improve by progressively adopting renewable energies in its operations and undertaking more environmentally friendly practices to reduce the dependence on carbon offsets.

Finally, as the company expands it will probably start internationalizing. Expanding overseas will make significantly difficult to maintain WP’s ethical practices. In particular, transmitting the company’s values to employees in foreign countries will be critical because we believe that they are the ones that actually preserve the company’s spirit. As a result, the company should first expand into countries where there is more cultural proximity and so costs resulting from cultural differences could be reduced. In addition, provided the necessity of control on corporate operations, the right way to carry out this expansion should be through subsidiaries. Certainly, this is the most expensive method to internationalize, but WP should continue its successful story step-by-step, focusing on the process and not the outcome, making an impact free of blindness.

Bibliography

http://www.warbyparker.com
http://blog.warbyparker.com
http://www.warbyparker.com/annual-report-2013/#
https://www.bcorporation.net/community/warby-parker
https://www.bcorporation.net/community/warby-parker/impact-report/2013-07-17-000000
http://www.euromonitor.com/eyewear-in-the-us/report
http://www.forbes.com/sites/ashoka/2012/10/05/the-visionspring-model-creating-markets-and-players-instead-of-empty-csr/
http://finance.yahoo.com/blogs/breakout/eyeglass-giant-fights-back-against-tiny-online-competitors-124045195.html
http://www.cnbc.com/id/47742143

Location: New York City (United States)

Sector: Wholesale and retail trade

Official website: http://www.warbyparker.com

Key figures:

2013:
Revenues: USD25M
Number of workers: 130
Capital raised: USD40M
Donations: More than 500,000 pairs of glasses

Nbr. visits: 994