On the Road A clear vision for the future of Warby Parker

University of Ottawa Brian Goodman Natasha Gulati Dave Pouliot Peter Yaraskavitch

Agenda

•  Vision testing

•  Getting a prescription

•  Framing the choices

•  Ensuring the fit

•  Seeing things clearly

2

Vision testing

•  Warby Parker is seeking to maintain its current growth rate while maintaining its social commitments and building a long-term brand

•  Satellite issues: •  Small market player

•  Brand awareness challenges

•  Reputation for exceptional customer service

•  Has financial resources to invest in growth

3

The prescription

•  Warby Parker must extend its commitment to social well-being by reaching out to those who share those beliefs while protecting its supply capabilities.

•  University students should be targeted

•  Address supply threat posed by Luxottica

4

Framing the choices

Decision Criteria Enter upscale market Develop niche market Focus on low-cost

Maintain social commitments X

Improve competitive position X

Maximize marketing investments X X

Improve technology X X X

5

Framing the choices

•  Compete in upscale market •  + opportunity to go on offensive against Luxottica

•  - would be going up against extremely strong competitor

•  Identify and compete in niche market •  + lower marketing costs

•  - may alienate current customers

6

Framing the choices

•  Compete in low-cost market •  + large potential market

•  - could lower reputation for strong service

7

Company Overview

Warby Parker

Retail and Online Community Outreach

8

Ensuring the fit

Strengths Weaknesses

Opportunities Threats

9

Ensuring the fit

Strengths - Customer service - Human resources - Innovation

Weaknesses

Opportunities Threats

10

Ensuring the fit

Strengths - Customer service - Human resources - Innovation

Weaknesses - Market share - Liability

- Distribution

Opportunities Threats

11

Ensuring the fit

Strengths - Customer service - Human resources - Innovation

Weaknesses - Market share - Liability

- Distribution

Opportunities - Expand offering - Partnerships - Demographic

Threats

12

Ensuring the fit

Strengths - Customer service - Human resources - Innovation

Weaknesses - Market share - Liability

- Distribution

Opportunities - Expand offering - Partnerships - Demographic

Threats - Competition - Changing preferences

13

Warby Parker’s Focal Point

Economy Fashion

Medical Devices Moral Leadership

Community

14

Customer Demographic

•  Care about social responsibility

•  Identify with a fashionable and stylish product

•  Looking for a premium product with a value proposition

15

Generation Y and Millennials identify with all of these values – Target university students!

Current Revenue Trend

•  Assumptions:

•  Sales Doubled each year

•  Average $293 per pair

•  Cumulative Sales at 2013 is 500,000 pairs

16

Projected Revenue Trend

•  Assumptions •  Cumulative sales at 2013

at 500,000 pairs

•  Low Growth = 75% CAGR

•  Medium = 100% CAGR

•  High Growth = 125% CAGR

17

Warby Parker Financial Situation

•  Completed round of $ 60 Million venture capital funding

•  Earmarked for increases to technology investment and increasing customer service teams

18

Portion of current financing can be used to continue further growth

Seeing things clearly

19 Growth & Learning

Operation

Customer Experience

Financial

Social Responsibility

First Approach Second Approach

Supply Chain Niche Customers

Increase Conditions Supply Chain

Enhanced Enhanced

Secure & Growth Growth

Innovation, Coherence, Marketing

First Approach: Securing Supply Chain

•  Why ? •  To reduce threat from Luxottica

•  Enhance worker’s conditions

•  Propose new products

20

Find Unique Supplier Or Secure Contracts

Create an CSR Analysis of the Supply

Chain

Improve Production Capacity and Development

6 Months USD $1Million

6 Months USD $500,000

As soon as Possible USD $10M / year

Second Approach: Enhance Customer Experience

•  Step 1: Open Retails Store Around University Campus:

•  Hire local students to promote the brand

•  Target: Canada and US - 20 Universities

21

•  How? •  Set-Up Online Associate webpage and actively approach Universities

•  Create a mobile team to help the associate set up the location

•  Reward entrepreneurs in shares in addition to salary

Timeframe: 1 year

Budget: 8 Millions for Leases

and Salary

Second Approach: Enhance Customer Experience

•  Step 2: Improve Marketing by Creating Stories

•  Why? Similar to a wine connoisseur or an Apple fan, the niche market you will be targeting is inspired and motivated by knowing their products

•  Concrete Example: Production – Delivery – Your own Experience – Giveback to Community

•  Extra-Mile: Sponsor celebs that embrace Warby Parker sustainable commitment

22 Timeframe: 8 months Budget: USD $15M

Furthering Social Commitments

•  Identification of other organizations that share social beliefs on strengthening communities through vision

•  Potential candidates include volunteer optometrists

•  Use their distribution networks for donated eyewear

•  Mutually beneficial

23

Return on Investment

•  Based on Medium Growth Year 1 Additional Revenue: $19.3 Million Year 2 Additional Revenue: $72.5 Million

•  Cost = $42.5 Million

•  Payback Period: ~1 to 1.5 years

24

Risks and Mitigations

Risks Mitigations

Increases in manufacturing costs Explore additional manufacturing options

Changes customer preferences Explore other niche markets that identify with the brand

Universities reject promotion of Warby Parker

Target Universities that are known for social values

25

Key Performance Indicators

Number of glasses donated: 528,000 pairs in 2014

Number of universities reached: 20 Universities

Secured a long term contract by: Middle of 2014

26

Key take-aways

•  Warby Parker must extend its commitment to social well-being by reaching out to those who share those beliefs while protecting its supply capabilities.

•  University students should be targeted

•  Address supply threat posed by Luxottica

•  This approach will allow Warby Parker to maintain its current growth and social commitments

27

Questions?

28