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Warby Parker ALEX BILL
BAILEY GLENN
KYLE JANSEN
MICHAEL PETER
September 1, 2014
The Decision at Hand
Opera0onal Tac0cal Strategic
Maintain current growth
rate
Distribu0on
Manufacturing
Bulk Imports
Marke0ng Plan Warby App
Human Resources
More employees
Takeaways
Recommenda0on
Implementa0on
Addi0onal Considera0ons
Agenda
Q & A Addi0onal Considera0ons
Metrics Implementa0on Recommenda0on
Alterna0ves Analysis
Compe00ve Landscape
The QuesIons We Face
How do we maintain growth with our
stakeholder oriented business model?
How do we address our distribu0on
channels?
Glasses Market in the US in 2014 § $16 billion market size
§ Approximately 61 million pairs of glasses sold
§ 160 million people in the US wear glasses
§ With 30% of the popula0on repeat buyers in a year,
§ There are 43 million unique buyers per year.
1%
80%
19%
US Market Sales
Warby Parker LuxoZca
Other
Major Designer Glasses Company
LuxoZca
Ray-‐Ban, Persol, Oakley
80% of the global market
500 million
pairs sold
Ver0cally Integrated
The Eyeglass Industry
Maturity
New Industry Obsolescence Big players
Saturated market
Who Buys Designer Glasses?
Men and Women
Age 25-‐50
Fashion Conscious
Have Money
What Do Customers Want from Designer Glasses?
Good Customer Service
High Quality
Fashionable
Where Do People Buy Designer Products? Brick & Mortar Declining
Online Quickly growing
Changing Technology Use in USA
80% have internet 5 hours online 2.5 hours on
smartphone
2 hours on mobile social
media
Aging Facebook demographic,
age 50
Current Analysis Conclusion We are opera0ng in a market dominated by one player: LuxoZca.
Customers are recep0ve to buying glasses online
Customer sa0sfac0on is crucial in this business
RevisiIng the QuesIons How do we address our distribu0on channels? How do we maintain growth with our stakeholder oriented business model?
Reality Check
How do we appease our venture capitalists so that we will not get
bought out?
SWOT Analysis
Strengths Weaknesses
Opportuni7es Threats
SWOT Analysis STRENGTHS
• Outstanding customer service
• Socially innova0ve brand
• Mo0vated employees
WEAKNESSES
• Small market share
• Smaller brand recogni0on than compe00on
• Not as much capital
SWOT Analysis OPPORTUNITIES
• Brick and mortar stores
• Global classroom expansion
THREATS
• Intense compe00on
• Venture capitalists’ desire to sell
Perceptual Map
Luxo;ca
Warby Parker
Price
Quality
Who is our customer?
Younger Eco-‐Friendly
Fashion conscious Interested in sustainable development
Price sensi0ve
Where does the customer purchase our glasses?
Online
Brick and mortar stores
Warby Parker Class Trip
How do we currently engage our customers?
Showrooms Referral System
Word of Mouth
Projected Revenue at Recent Growth Rate
Total Units 2013 2014 2015 2016 2017 2018 2019
Sales by Year 333,333
1,000,000
2,000,000
3,000,000
6,000,000
12,000,000
24,000,000
Cumula0ve Sales
500,000
1,500,000
3,000,000
6,000,000
12,000,000
24,000,000
48,000,000
Revenue (‘000s) $ 33,333 $ 100,000 $ 200,000 $ 300,000 $ 600,000 $ 1,200,000 $ 2,400,000
$-‐
$5,000,000,000
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Revenue
Projected Income at AnIcipated Growth Rate
2014 2015 2016 2017 2018 2019
Growth Rate 100% 90% 80% 70% 60% 50%
Sales
1,000,000 1,900,000
3,420,000
5,814,000 9,302,400
13,953,600
Revenue ('000s) $100,000 $190,000 $ 342,000 $581,400 $930,240 $1,395,360 Opera0ng Income ('000s) $30,000 $57,000 $102,600 $174,420 $279,072 $418,608 Net Profit ('000s) $15,000 $28,500 $51,300 $87,210 $139,536 $209,304
Total Net Present Value of cash flows over next five years equals approx. $320,000,000 (with an es0mated WACC of 15%).
Financial Analysis from Glasses Sale
Selling Price $100 COGS $20 SG&A $20 One for One Cost $9 Gross Profit $41 Less Interest & Taxes $14 Net Profit $27
CriIcal Success Factors
CSF What We Have Sustainable Compe77ve Advantage?
Profitability Not profitable No.
Mee0ng the customer’s needs Lower priced fun products No.
Innova0on Modern style Yes.
Mee0ng investors needs Consistent growth Poten0ally.
IntroducIon of AlternaIves
IPO
Immediate buyout by LuxoZca
Con0nued growth
AlternaIve 1 -‐ IPO PRO • Immediate access to large pools of funding • Promote awareness
CON
• Poten0al loss of culture • Poten0al loss of control
AlternaIve 2 – Immediate Buyout to Luxo[ca PRO • Immediate cash
CON
• Poten0al loss of socially conscious culture • Loss of control
AlternaIve 3 – ConInued Growth PRO • Maintain control of company • Expand social efforts
CON
• No immediate payoff to our venture capitalist investors
EvaluaIon of AlternaIves
Cri7cal Success Factors
IPO Buyout Growth
Profitability
Mee0ng the customer’s needs
Innova0on
Mee0ng investors needs
The Clear Future Plan Maintain current
growth rate
Distribu0on
Manufacturing
Bulk Imports
Marke0ng Plan
Warby App
Corporate Partnerships
Sustainability
Increase dona0ons
Human Resources
Hiring new employees
The Clear Future Plan Timeline
Phase 1 Year 1
Phase 2 Years 2-‐3
Phase 3 Years 3-‐5
The Clear Future Plan – Phase 1
Distribu0on
Sustainability
Marke0ng
Human Resources
Phase 1 Phase 2 Phase 3
DistribuIon & Sustainability
Distribu0on • Source storage facili0es in top 20% receiving na0ons
• Start expor0ng dona0on in bulk
Phase 1 Phase 2 Phase 3
Sustainability • Increase non-‐profit partners
MarkeIng
• Corporate Partnerships
• Warby Stamp
• #warbywear • Promo0onal codes
• Applica0on
• Instagram • Facebook
• Fashion Blogs • Film Fes0vals
Aware Know
Differ Advocate
Phase 1 Phase 2 Phase 3
Human Resources
Human Resources
• Source and select 50 new employees
• Target colleges
Phase 1 Phase 2 Phase 3
The Clear Future Plan – Phase 2
Phase 1 Phase 2 Phase 3
Distribu0on
Marke0ng
Sustainability
Human Resources
DistribuIon & Sustainability
Phase 1 Phase 2 Phase 3
Distribu0on & Sustainability
• Locate an area in an key receiving na0on to contract a manufacturing facility
• Launch Warby Parker Stamp Campaign
Human Resources
Phase 1 Phase 2 Phase 3
Human Resources
• Source and select 100 new employees
• Search for talent in the Nashville area
The Clear Future Plan – Phase 3
Phase 1 Phase 2 Phase 3
Distribu0on
Sustainability
Human Resources
DistribuIon
Phase 1 Phase 2 Phase 3
Distribu0on • Contracted manufacturing facility opera0onal
Human Resources
Phase 1 Phase 2 Phase 3
Human Resources
• Source and select 200 employees
Budget
2015 2016 2017 2018 2019
Marke0ng $6,750,000 $8,437,500 $10,546,875 $13,183,594 $16,479,492 Payroll Increase $3,750,000 $7,500,000 $3,750,000 $3,750,000
Manufacturing $2,000,000
Storage Facili0es $150,000 $150,000 $150,000 $150,000 $150,000
Total $10,650,000 $16,087,500 $16,446,875 $17,083,594 $16,629,492
Metrics • Double profits by 2016
Profitability
• Pay 33% of our investors ini0al investment by 2019
Investors’ needs
• Be a 650 employee company by 2019
Human Resources
Risks & MiIgaIons
Risks
LuxoZca creates socially minded product line
New Entrant
Likelihood
40%
80%
Mi0ga0on
Marke0ng Campaign:
“Everyone wants to be like us”
Brand Loyalty
AddiIonal ConsideraIons How can we further reduce our carbon
footprint while we expand?
Could we partner with TOMS?
Could we adver0se with product placement in Bollywood and
Nollywood?
QuesIons and Answers
Appendix The Ques0on at Hand
Takeaways
Agenda
The Ques0ons We Face
Glasses Market in the US in 2014
Major Designer Glasses Company
The Eyeglass Industry
Who Buys Designer Glasses?
What Do Customers Want from Designer Glasses?
Where Do People Buy Designer Products?
Changing Technology Use in USA
Current Analysis Conclusion
Revisi0ng the Ques0ons
SWOT Analysis
Perceptual Map
Who is our customer?
Where does the customer purchase our glasses?
How do we currently engage our customers?
Projected Revenue at Recent Growth Rate
Projected Income at An0cipated Growth Rate
Financial Analysis from Glasses Sale
Cri0cal Success Factors
Introduc0on of Alterna0ves
Alterna0ve 1 – IPO
Alterna0ve 2 – Immediate Buyout to LuxoZca
Alterna0ve 3 – Con0nued Growth
Evalua0on of Alterna0ves
The Clear Future Plan
The Clear Future Plan Timeline
The Clear Future Plan – Phase 1
Distribu0on & Sustainability
Marke0ng
Human Resources
The Clear Future Plan – Phase 2
Distribu0on & Sustainability
Human Resources
Distribu0on
Human Resources
Budget
Metrics
Risks & Mi0ga0ons
Addi0onal Considera0ons
Going Abroad
Venture Capitalist Goals
Going Abroad
Purchase a facility strategically located near popula0on centers • Western Europe, China, Japan
Market through local social media
to young professionals and
youth
Increase our offerings to cater to different and changing styles
Venture Capitalist Goals
Funding
Round 4 $60 Million
Round 3 $30 Million
Round 2 $15 Million
Round 1 $5 Million
Total $110 Million
Required Return $1.10 Billion (10x)
