Is there a startup that killed a big giant?

Warby Parker Killed (or at least shook ) Ray-Ban and the entire eyewear industry!

This is a very interesting story!

Do you ever wonder why sunglasses or normal eyewear is so expensive? After all, they are made up of plastic, glass, some wires, and screws! While technological advancement has brought down the cost of many digital devices, these plastic pieces are still being sold for 100s of dollars! WHY?!

This is the question that Dave Gilboa & Neil Blumenthal, 2 college buddies struggled with. Right before he started business school, Dave had accidentally left his glasses on an airplane. And it cost him $700 to buy one, back in 2008, when the iPhone, a technological marvel, was being sold for $200!

When Dave asked his friend Neil as to why these glasses are worth so much, he had an interesting answer. You see, having worked in the optical industry, Neil knew that the majority of the eyewear market is controlled by a single multinational- Luxottica.

Luxottica has a market cap of about $30 billion. They own Oakley, Ray-Ban, Oliver Peoples, Persol and Arnette. They license almost every major fashion brand under the sun like Ralph Lauren and Chanel and Prada and Dolce & Gabbana. They also own a lot of the major retail chains like LensCrafters and Pearle Vision and Sunglass Hut, Sears Optical, Target Optical and many more!

Companies owned by Luxottica (Source: How Did Warby Parker Grow to a $1.2 Billion Ecommerce Company in 5 Years? - Growth Marketing Pro)

And if you need insurance for your glasses, you likely have it through the nation’s most popular vision insurance provider, Eyemed. Eyemed is also owned by Luxottica.

So you see, when you control the entire supply chain- the making, the distribution, the insurance, and everything in between, you can sell these cheap plastics at whatever price you want. And that’s exactly what Luxottica was doing! Markups are sometimes higher than 20x – meaning your $300 sunglasses might cost $15 to make

Seeing that the entire market is dominated by a single company, they saw a market gap and decided to start their own eyewear brand Warby Parker which would be selling glasses online, bringing down the cost to a fraction (less than $100) to what Ray-Ban and other companies under Luxottica were selling.

Soon they got a lot of press for their efforts and people were shocked to see quality sunglasses for under $100 which they were used to buy for over $500.

Last I saw online, Warby has raised $215 million and is valued at $1.2 billion.

A perfect story of how technology acted as the savior and help shake the status quo and bring justice to the world!

Thanks for reading