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The Warby Parker clones are imploding
- hef19898 7y agoFunny things is, Warby looks a lot like Fielmann, a German "low cost" chain for glasses. Ehich used to be a startup like 20 years ago. Eho said copy cating can't go the other way!
- RandallBrown 7y agoI never thought that what made Warby Parker unique was that it was direct to consumer. I thought it was that they shipped you a bunch of glasses to try on for free. I work for a direct to consumer lifestyle brand company but I've never thought or heard anyone mention Warby Parker in any conversation about us or our business model.
- blackearl 7y agoI went to buy new glasses from a classic optometrist and was horrified by the prices. I also tried the more corporate Lenscrafters. Both wanted to push $2-300+ frames with Nike, Gucci, et cetera branding that I didn't care about. Finally tried WP. Cheaper glasses with pretty solid customer service. Sure it doesn't have a little swoosh on it but I buy glasses so I can see good, not so I can flex.
- jvagner 7y agoI needed progressives (tri-focals). WP doesn't do lenses like that. My brand name frames were $200. Lenses were more than $300 on top of the frame price. It's not just the frames.
- blackearl 7y agoOne of my friends bought counterfeit frames from China and then got the special lenses he needed made to fit the frame. Regardless of the cost of lenses, there's no way in hell I'm paying extra for a frame that is otherwise identical to 100 others, but it has a tiny little logo on it so now it's 1000% of the cost.
- se7enzer0 7y agoNot only does WP do that, they have a page dedicated to it. https://www.warbyparker.com/progressives https://www.warbyparker.com/progressives
- jvagner 7y agoI do own WPs, from a couple of years ago, for general use. I walked into a WP store in the last couple of months and asked.. alas, I was told something different.
- deleted 7y ago[deleted]
- kevindong 7y agoPerhaps the best thing about Warby Parker is their pricing transparency. It's near impossible to get a quote from a traditional optometrist without going into a store.
- jorams 7y agoIt's funny you mention that, because I just looked at their website and was very confused why the product listings don't mention prices, only the product pages after that do. Seemed weirdly opaque to me.
- dublinben 7y ago>“Buy mattress at $400. Sell at $1,000. Refund/return 20% of them. Keep $400, on avg. Then spend $290 of that on ads/marketing and $270 on admin (finance, HR, IT). Lose $160. Repeat.” The unit economics of most of these companies just don't add up.
- mcny 7y ago> >“Buy mattress at $400. Sell at $1,000. Refund/return 20% of them. Keep $400, on avg. Then spend $290 of that on ads/marketing and $270 on admin (finance, HR, IT). Lose $160. Repeat.” I don't know much about the business side of things but asuming the $290 on marketing and the $270 on admin don't scale less than linearly (preferably much MUCH more flatlined), then the $160 loss could be closer to a $300 profit. Even if you lower the sale price by $299 (extreme scenario), you still get a dollar in profit. At the end of the day, I think the product has to be consistently good enough and the branding will "stick". I imagine the goal is to gain enough market share. I'll share an anecdote: I bought an InstantPot for a decent discount a few years back on Black Friday. I've personally "sold" at least three since to people I know. I'm sure the cheaper brands are likely almost as good as InstantPot but for me to take a chance on them, I'd need to trust they have a no questions asked return policy.
- mrosett 7y agoThe marketing spend actually scales faster than linearly. These companies do a lot of direct response advertising where acquiring the marginal customer becomes more expensive as you scale up.
- wrsh07 7y agoThis is often the case for many companies acquiring the marginal customer, because the ones for whom it is a good fit will find it first (very cheap to acquire - they're looking for you). Then there are customers who only need a trial (or a small amount of information "what is it") before they come on board. Finally you get to tough sells: people who already have a good enough alternative - why would they want to pay the same amount as someone who had no systems in place? The marginal benefit to them isn't as high. As you expand out from your original customer base, each new ring of customers is more expensive to acquire. This is the situation Casper, Blue Apron, and many others face. Meanwhile, their competition has also ramped up - providing other alternatives (which might fit niche customers better)
- blackearl 7y agoEvery investor wants an instant monopoly and the ROI to go with that. It's just not possible. Can't say I'll ever shed a tear over my VC subsidized Uber rides.
- JumpCrisscross 7y agoEyewear is a broken market, with atypical margins sustained by a monopolistic market leader [1]. The market leader's lock-in stems from its distribution power. Sidestepping it with DTC makes sense. None of the above apply to mattresses or suitcases. (It more-closely applies to razors.) There is limited fat to trim that would overcome incumbents' economies of scale and distribution advantages. [1] https://en.wikipedia.org/wiki/Luxottica https://en.wikipedia.org/wiki/Luxottica
- ngokevin 7y agoAs with much of the economy, it's winner-take-all. I would put Zenni Optical alongside Luxottica as the duopoly at the moment. Warby is popular, but it's driven a lot by marketing and VC.
- ceejayoz 7y agoIt was really jarring to order a $25 pair of glasses from Zenni and have them be basically indistinguishable from my old $400 pair.
- nyolfen 7y agothe WP glasses i tried a few years ago via mailed preview package all seemed like the very lowest quality i had ever handled -- flimsy plastic, cheap-feeling hinges. totally pleased with my 40$ pair from zenni though.
- ahi 7y agoJust how big a market do these companies have? It seems like the target demographic for most of them is rich college kids and marketing/mba/tech yuppies in 4 or 5 cities.
- ncmncm 7y agoI can't say anything definitive about why they are imploding, but I can say that exactly zero of the many sites I tried offered any frames at all that I could use. Every optometry shop I stopped in had at least three or four.
- Apocryphon 7y ago> Now under pressure to grow even faster and at greater scale than they otherwise would have had to naturally, they are being confronted with what happens when growth slows down, the cash starts running out, and investors are expecting their returns. Are we near the beginning of an anti-VC wave in public opinion?
- rossdavidh 7y agoI believe that started around the time WeWork's IPO imploded. We're well past the beginning.
- Apocryphon 7y agoIt’s going to be real interesting if YC’s HN becomes the destination of disgruntled former employees of startups that get their VC-inflated bubbles burst in the upcoming recession
- fenwick67 7y agoI'm already riding it. After MoviePass started collapsing it became very clear that many of these companies are growth-first, profit-later-somehow. Then I worked at a small startup that fell apart due to mismanagement.
- rossdavidh 7y agoStep 1) come up with decent idea for $10million company Step 2) get offered funding for a $200million company Step 3) accept it, because, money! Step 4) spend money, attempting to get bigger than you can get Step 5) implode
- mixmastamyk 7y ago4a) Cash out
- wpietri 7y agoI'll be very interested to learn how often this happens. Certainly Kalanick and Neumann managed to walk away billionaires from companies that have never turned a profit. But I'm hoping that is a rare outcome.
- smallgovt 7y agoJust because Uber hasn't turned a profit doesn't mean they aren't worth $xxB. If you actually believe Kalanick cashed out his shares at an overvalued price, go short Uber and make tons of money. That said, you're probably wrong.
- wpietri 7y agoIt depends on what you mean by "worth". Market price is market price, after all. But it's perfectly plausible that Uber will never turn a profit. It's indisputable that Uber was severely overvalued for a long time. And when thinking from a systemic perspective about whether Kalanick should be a billionaire, we have to reckon with the externalities.
- jfengel 7y agoI wonder how this will affect podcasting. I don't do Instagram but I do know some of the products in this article from supporting podcasts I listen to. I've even gone out of my way to buy some of their products. (Harry's makes fine razors that last too long for the company's own good.) I've been shifting money to Patreon campaigns, but I don't know well that will work for them.
- lastres0rt 7y agoSucker born every minute? I don't know how much money it takes a podcast to support itself but I imagine it's still heaps cheaper than, say, your average billboard or 30-second TV spot.
- jfengel 7y agoI figure that a basic podcast probably needs around $50,000 per year to support itself, if a single full-time person is doing all of the research and engineering (including coordinating ads) and paying for the servers. That comes to about $1,000 per episode of a weekly podcast. Harry's would have to sell a lot of razor blades to justify $1,000 per episode -- or even $250 an episode, if there are four ad spots. A higher-end podcast with a real engineer, research assistants, producer, etc. could easily double or quadruple that figure. Some podcasts are undoubtedly cheaper, being done in somebody's spare time, but most of the ones I listen to (and I listen to a lot of them) involve significant research.
- karaterobot 7y agoI was wondering the same thing! I think you're right that subscription services are the future. I think it'll help Spotify consolidate more of the bigger shows under exclusive contracts (not all big shows, but more of them). On the flip side, more smaller shows, which never made much money from ads anyway, will finally be pushed into joining Patreon, which will ultimately be a good thing for them.
- virmundi 7y agoNo one sells pince nez glasses for nearsighted people.
- pacaro 7y agoI suspect that you'd need to get lenses made for a vintage frame. I don't think that pince nez has been a commercially viable option for about 100 years
- h2odragon 7y agotry talking to a jeweler?
- virmundi 7y agoI know. I just want a Zenni of Pinces.
- ficklepickle 7y agoA quick look on eBay turns up a ton of results. Lot's of very cheap ones, but not exclusively. For $60 shipped, these[0] ones are made in France and have Hoya lenses. I know nothing about lenses, but Hoya seems to be respected from a quick google. I think they are out there, just not being aggressively marketed by VC-funded lifestyle brands. But hey, there's a startup idea. You just need to make pince nez fashionable by getting some retrosexual hipsters on Instagram to adopt them. Then, profit? For some reason I associate wire-framed pince nez glasses with eugenics, not sure why. I'm sure that's just me, but maybe run a focus group just to be sure. [0] https://www.ebay.com/itm/Reading-Glasses-Filao-Pince-Nez-Acetate-Brown-Beige-35-mm-Hoya-Lens/124108978951?hash=item1ce578bb07%3Am%3AmAPILPa7XeG4ms61s8TWMAw&LH_ItemCondition=3 https://www.ebay.com/itm/Reading-Glasses-Filao-Pince-Nez-Ace...
- virmundi 7y agoI’ll look into it. Don’t know where to get custom lenses. I figure it out. Thanks.
- hogFeast 7y agoCanary in the coal mine for digital advertising.
- isoskeles 7y agoWhat do you mean? Is it that digital advertising, as an industry, makes a large amount of money from these DTC startups, and the implosion of these startups will mark a dramatic drop in said advertising revenue? Just clarifying. And that does seem like a real possibility, I'm inclined to agree. I did not realize what "DTC" was until I read this article, and it's pretty much every single ad I see if I install Instagram on my phone and scroll through it. Dozens of brands that I've never heard of selling sustainable shoes, protein cereal, etc. Just a bunch of weird, esoteric, lifestyle products that you can't find at a normal store.
- hogFeast 7y agoYes. DTC takes in money, digital advertising prices rise, DTC go out of business, digital advertising prices fall. Obviously, there are other factors but these DTC brands provide a very blunt perspective on whether digital advertising is effective (most of these companies don't manufacture, they are just advertisers).
- dschadd 7y agoI wonder what the second order effects are of everyone wising up to DTC. Casper is a mattress company, not a tech company. The same can be said for Warby, Away, Allbirds etc. I think it is likely for the ad revenues of Facebook and Google to slow their growth in response to VC financed commodity companies throwing around ad dollars.
- onion2k 7y agoCasper is a mattress company, not a tech company. Casper is a mattress marketing company.
- dschadd 7y agoThat's what makes it unlikely VC will continue to finance growth commodity manufacturing companies. People are learning the only differentiation between these companies and older brands are slick copy, whitespace, and sleek colorways.
- onion2k 7y agoVC money will always be available to a startup that has identified a market that hasn't been disrupted yet. It doesn't matter if the business is just some ad copy and whitespace, if there's a good margin and hockey stick growth there will always be investors waiting for you to execute. At no point in the past, and at no point in the future, will a VC be put off by the fact a business is just a thin, shiny new veneer over an old model. If there's profit to be had and a founder who can take it that is all VCs want. This is a good thing. It's how markets work. If it ever became impossible to disrupt a market because VCs decided it was too boring the startup world would fall apart. No incumbent business should be allowed to rest. Innovation is everything, even when that "innovation" is just better marketing.
- _bxg1 7y agoHighlighted quote: > Perhaps the original mistake of the DTCs wasn’t in their vision, but in their decision to take the venture capital in the first place. Now under pressure to grow even faster and at greater scale than they otherwise would have had to naturally, they are being confronted with what happens when growth slows down, the cash starts running out, and investors are expecting their returns. The same story keeps playing out, doesn't matter what industry.
- paxys 7y agoThe other side of it is that none of these companies would have been remotely competitive in the first place had it not been for venture capital. All these industries (mattresses, taxis, fashion/eyeglasses) are monopolistic and anti-competitive in nature, and the current players have been entrenched for decades, some even longer. The only way to make inroads is by burning cash. The growth might not always be sustainable, the business model might not always make sense, and that's fine. VCs are looking for 1 in 10 of them to be successful.
- Apocryphon 7y agoVC giveth, and it taketh away. Don't the VCs deserve at least part of the culpability, if they had imposed terms that were unrealistic?
- annoyingnoob 7y agoBeen waiting for Backdrop to implode. Paint for people that don't know anything about painting. Retail prices without the retail experience. They'll have some one-time customers, even if you like the product and your project is successful its not like you paint very often. Backdrop needs a continuous stream of new customers.
- notlukesky 7y agoThis is a good piece on DTC: https://www.linkedin.com/pulse/potentially-unpopular-opinion-future-dtc-luke-weston/ https://www.linkedin.com/pulse/potentially-unpopular-opinion... This is a good podcast on it by Ben Thomson and James Allworth: https://exponent.fm/episode-182-scale-scale-scale/ https://exponent.fm/episode-182-scale-scale-scale/ The key takeaways are attack super high margins, do something that is harder in the real world, scale as fast as possible without paying too much rent to “Facebook/Google/Instagram/Influencers” to establish yourself.
- aerosmile 7y agoConjecture and poor reasoning. > There are now more than 400 DTC brands So a sample size of n=5 is sufficient to define an industry-wide trend? On top of that, those 5 examples are not very convincing - see below. > How could [Away] possibly be able to meet the expectations for investor returns? No actual figures, just a theory that Away couldn't possibly be a good investment because it has only one product. > Away now has many adjacent venture-funded expansions in the works In the very next paragraph, the author debunks the basis for her earlier skepticism. > Harry’s... cut a $1.37 billion deal to be acquired by Edgewell. Edgewell backed out of the deal after the FTC sued to block the sale... Particularly in the wake of the Casper IPO, it’s difficult to imagine Harry’s ever wanting to expose its numbers in an S-1. All of Harry's criticism is based on a competitor's performance and a buyer backing out of a deal after it was blocked by the FTC. I don't know if the DTC companies will do well, but I certainly didn't learn anything useful from this article.
- sjg007 7y ago1. You need the script. Thankfully state laws allow you to request it from your doctor and they have to give it to you. 2. You need to do that weird eye alignment thing. I think there are apps for that but not sure if they work well though. 3. You need to pick a frame. These three things really hinder online eye glass purchases.
- basicplus2 7y ago"Now, everyone is armed with the same millions of dollars in funding; they’re all targeting the same users, and they’re all driving each other’s marketing costs up. (Marketing software company AdStage analyzed its Facebook impressions data and found that the median cost-per-click for Facebook news feed ads has risen from $0.43 during the second quarter of 2018, to $0.64 during the second quarter of 2019.)" Seems pretty expensive given very few clicks would result in any sale
- rb808 7y agoIs Warby Parker doing OK? Last time I bought glasses WP just looked expensive compared to zenni, glassesusa, 39dollar, glassesdirect, framedirect etc etc
- unexaminedlife 7y agoI've seen this kind of story on the front page of HN for what seems like at least a decade (probably a lot longer, but I'm relatively new to the site). I'm not actively rooting for the VC world to implode on itself, but based on the way they behave they're absolutely not spending their own money. I want legislation in place that will prevent VC firms from investing in a project / startup unless they've put a certain percentage of their own money at stake. Maybe at that point we'll start seeing a lot less "pump and dump" and a lot more efforts toward building sustainable businesses.
- d3ntb3ev1l 7y agoSo little time, so many people wasting it taking money from VCs
- davidkind 7y agoWarby Parker worked in the DTC space because they received an inordinate amount of PR which drives down customer acquisition cost due to relatively cheap traffic. If that goes away, so does much of their business and any hope of profitability. Much like the rest of the brands mentioned.
- 55555 7y agoYes and facebook click costs nearly 10x'd for ecommerce during the time period the article discusses.