
The Warby Parker clones are imploding - hhs
https://marker.medium.com/why-all-the-warby-parker-clones-are-now-imploding-44bfcc70a00c
======
JumpCrisscross
Eyewear 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)

~~~
wpietri
Mattresses were a notoriously opaque and user-hostile market. A decade ago I
was working at a startup aimed at helping people make better purchasing
decisions, and that was one of the top categories people mentioned struggling
with.

Things are at least a little better now, in that at least the DTC companies
have a clear set of options that get sold at reasonably clear price points.

~~~
JumpCrisscross
> _Mattresses were a notoriously opaque and user-hostile market_

Based on the data, I think we can conclude that opacity and user hostility are
insufficient criteria for a DTC play. (Unless consumers are willing to pay a
premium for the removal of said opacity and hostility.)

~~~
fasteddie
Maybe just a little before Casper was founded, I bought a memory foam mattress
off of Amazon that was well-reviewed and could be delivered with Prime. It's
been a great mattress. That's still an option today -- and at a few hundred
dollars cheaper than the main DTCs, I'm not quite sure where they can really
provide a ton of additional value.

~~~
Spooky23
You have some assurance that you’re buying a consistent product.

Buying a foam mattress on Amazon sounds like inviting some sort of toxic mess
of outgassing junk into your bedroom. No thanks.

~~~
blaser-waffle
Yeah I got an "egg crate" mattress topper off of Amazon and had to let that
thing sit in my garage for a week before it didn't reek. I can only wonder how
much it off gassed after that, but my bedroom has decent ventilation so
hopefully I didn't breathe in too many carcinogens.

------
dublinben
>“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
> >“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.

~~~
PascLeRasc
Same with Warby Parker, I've "sold" my entire family and 3-4 friends on buying
a frame, and everyone's loved them. If you have vision insurance it's
typically ~$50 after reimbursement for a fantastic set of frames and great
customer service. I've gotten frames fixed a year after buying them for free
with no appointment or anything. I'm not interested in trying anything else or
hearing about in-network frame allowances, it's just not worth my time. I'll
be a Warby customer as long as we're both alive.

~~~
wayoutthere
Wait until you find out about Zenni Optical... they're so cheap I don't even
bother with vision insurance anymore. My prescription hasn't changed in
decades, and at Zenni prices I can buy a new pair of glasses (frames + lenses)
every month for less than a single pair from Warby. I've had my favorite pair
(that were originally <$20 with lenses) for about 5 years, so durability isn't
an issue. Their customer service is similarly good in my experience.

After being a Zenni customer for years, Warby Parker's prices seem really
high. I've tried their glasses on at one of their retail stores, and I don't
see much of a difference in quality.

------
rossdavidh
Step 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
4a) Cash out

~~~
wpietri
I'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
Just 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
It 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.

------
RandallBrown
I 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
I 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.

~~~
dmart
Warby Parker's purchasing/CS experience is incredible and I've been buying
from them for at least 8 years now. But I think I may try one of the more
corporate brands next time because I've just never been very satisfied with
their lenses. Supposedly they use an anti-glare coating but in my experience I
still get pretty bad reflections from screens and have to wipe them down
multiple times a day because of how easily they smudge.

As much as I hate the idea of giving money to Luxottica, I'm more than willing
to pay a premium for nicer lenses.

~~~
tomcam
I have been buying from ZenniOptical for years. I’m pretty nearsighted and use
bifocals. As a test I purchased $1,500 specs from my local optometrist and $39
bifocals from Zenni. No difference except the Zenni frames lasted much longer.
Also I’d swear the Zenni lenses were clearer, which makes no sense.

------
_bxg1
Highlighted 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
The 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
VC giveth, and it taketh away. Don't the VCs deserve at least part of the
culpability, if they had imposed terms that were unrealistic?

------
blackearl
Every 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.

------
jfengel
I 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
Sucker 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
I 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.

------
dschadd
I 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
_Casper is a mattress company, not a tech company._

Casper is a mattress _marketing_ company.

~~~
dschadd
That'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
VC 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.

------
notlukesky
This is a good piece on DTC:

[https://www.linkedin.com/pulse/potentially-unpopular-
opinion...](https://www.linkedin.com/pulse/potentially-unpopular-opinion-
future-dtc-luke-weston/)

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
Conjecture 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.

------
annoyingnoob
Been 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.

------
davidkind
Warby 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
Yes and facebook click costs nearly 10x'd for ecommerce during the time period
the article discusses.

------
Apocryphon
> 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
I believe that started around the time WeWork's IPO imploded. We're well past
the beginning.

~~~
Apocryphon
It’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

------
basicplus2
"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
Is Warby Parker doing OK? Last time I bought glasses WP just looked expensive
compared to zenni, glassesusa, 39dollar, glassesdirect, framedirect etc etc

------
sjg007
1\. 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.

------
ncmncm
I 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.

------
unexaminedlife
I'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.

------
virmundi
No one sells pince nez glasses for nearsighted people.

~~~
h2odragon
try talking to a jeweler?

~~~
virmundi
I know. I just want a Zenni of Pinces.

~~~
ficklepickle
A 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-
Ace...](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)

~~~
virmundi
I’ll look into it. Don’t know where to get custom lenses. I figure it out.
Thanks.

------
hogFeast
Canary in the coal mine for digital advertising.

~~~
isoskeles
What 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
Yes. 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).

------
d3ntb3ev1l
So little time, so many people wasting it taking money from VCs

------
ahi
Just 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.

~~~
ngokevin
Online eyewear is maybe 5 to 10% of all eyewear, but rapidly growing as
consumers realize they can pay $7 for glasses instead of $200 (e.g.,
zenni.com).

~~~
LanceH
With my kids, it's nice to buy 3 pair at $13 each rather than one deductible
of $40 with vision insurance.

------
hef19898
Funny 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!

~~~
OzzyB
Copycating is based on who gets their brandname favorably mentioned first in
Techcrunch/Buzzfeed/Vox etc, then the rest become copycats.

~~~
hef19898
Or when you are a Rocket Internet company.

