January 11, 2013 / 4:46 PM / 6 years ago

Moscot and Warby Parker: How two small eyewear companies saw their way to success

U.S. Census figures don’t lie: About 59 percent of retail businesses started by 2005 were gone by 2010. And in the eyewear business, the odds are especially difficult as one major company, Luxottica, dominates the manufacturing and distribution market. (The Italian company owns Oakley, Ray-Ban and Persol, along with Sears Optical and Lenscrafters.)

Co-founders of Warby Parker, Dave Gilboa (L) and Neil Blumenthal, are seen in this undated handout photo. REUTERS/Benjamin Lozovsky/BFAnyc.com/Handout

Profiled in October on “60 Minutes,” the company founded by Leonardo Del Vecchio is now the world’s largest eyewear company, worth an estimated $8.5 billion. Luxottica designs and retails more than 80 percent of the world’s major eyewear brands.

Yet two small New York City eyewear companies-one old, one new-have embraced their own individual principles to turn profit in an incredibly competitive market space. The upstart on the block, Warby Parker, opened in 2010. But it has already grown more than 500 percent after hitting its first year’s sales target for $95 eyewear in three weeks.

Then there’s Moscot, a family-run company now in its fourth generation. It has literally grown from Hyman Moscot’s single pushcart in 1899 to a worldwide symbol of Big Apple sophistication. Yet it’s done so without swank ad agencies or a big-name fashion photographer. (Co-president Wendy Simmons handles Moscot fashion shoots.)

Reuters spoke with executives at Warby Parker and Moscot to learn about practices and principles that led them to innovate and thrive while competing against such big company. Their perspectives shed light on how to win in a cramped retail sector.

Warby Parker: Lost glasses lead to a found vision

While backpacking in Thailand, future Warby Parker co-founder Dave Gilboa lost his glasses. Returning to the United States for a semester at the University of Pennsylvania’s Wharton School, he wasn’t sure how much it would cost to replace them. That’s when sticker shock hit: $700 for a new pair.

“I had just bought an iPhone 3G for $200,” Gilboa recalls. “It didn’t make any sense that a magical phone that did things nobody could’ve imagined cost $200, and these glasses that used the same basic technology for 800 years cost $700.”

Instead of swallowing his eyewear ire, Gilboa pondered like any good business student: Why did prescription glasses cost so much? That’s when he learned about Luxottica’s iron grip on the market. And with three Wharton classmates, he co-founded Warby Parker, bootstrapped out of a Penn campus apartment on a simple premise: What if you could do a nimble end-around past Luxottica and sell prescription eyewear online for $95 a pair?

Here’s what they discovered: Less than 1 percent of eyeglasses were being sold online. And here’s how they leaped into the breach: They developed a “virtual try-on” system that can take your photo though your computer, and let you model a frame, in as fast as a minute.

“We were excited by the idea of disrupting an industry that had been overcharging consumers for decades,” Gilboa says. “When we talk to other folks interested in entrepreneurship, we ask them to think about the frustrating parts of their own lives, identify those parts, and see if there’s a better way to do things. The best businesses solve problems, and we want to be active problem solvers.”

Moscot: A family frame of reference

Co-president Harvey Moscot grew up behind the counter of the family’s Orchard Street store in New York, alongside his uncles, grandfather and father. As early as age 8, he fitted screws into eyeglass frames.

“When we interact with customers, we try to make them feel like family,” says Moscot, an optometrist who officially joined the business in 1986. “That’s the only frame of reference that I’m comfortable with.”

The twin themes of family and generations permeate every aspect of Moscot’s identity. Go to their website, and you’ll see a “Celebrating Living/History” gallery. It features Moscot wearers who run family businesses spanning four or more generations.

“Family is part of our DNA,” says Simmons. “Some employees have been here for 40 years, and if you question people across the board, they’ll tell you it percolates through the entire organization. It really changes everything we do. The brand is the people.”

The Warby Parker playbook: four friends, collaboration and a gutsy PR gamble

Many business experts will tell you it’s dumb to go into business with friends. Gilboa certainly heard his share of that at Wharton. “But we decided to ignore all of that,” he says, laughing. “And I definitely encourage people to do it. When you start a business, realize that you’ll spend 24 hours a day with these people, and it might be bizarre to make that commitment to someone who doesn’t know you well.”

Gilboa and his co-founders, Neil Blumenthal, Jeffrey Raider and Andrew Hunt, grew to value collaboration. Now ensconced in a Soho office, Warby Parker has no physical walls between departments. “We knocked them down,” Gilboa says. “We encourage people to collaborate, to be part of an open environment.”

That kind of team play led the foursome to invest part of their combined life savings on a big gamble early on. They contracted a top fashion PR firm, Bradbury Lewis, to help them get press. Soon they landed in GQ and Vogue, taking Warby Parker from unknown to renowned at warp speed.

Warby Parker doesn’t release official sales figures, but it gives away one pair of glasses for everyone it sells-and to date, it’s given away more than 300,000 pair.

Through all the founders’ success, “our friendship was the most important thing,” Gilboa says. And we’re all still great friends.”

The Moscot playbook: Hands on, hearts and guts, humor

Moscot expects to sell approximately 50,000 pairs of glasses in 2012 in 41 countries. So as a doctor and successful executive, Harvey Moscot is well past the point of waiting on customers.

Yet every Saturday, you’ll find him on the floor of Moscot’s retail shops, doing exactly that.

Moscot says it’s how he stays in touch with what consumers like and how they want to be treated. As he puts it, “You’ve got to have boots on the ground.”

That approach translates to how Moscot handles everything from fashion photo shoots to marketing campaigns. It’s all done in house, with input from everyone in the company.

“Harvey and I run the business on our hearts and our guts,” Simmons says. “So many business owners get wrapped up in what books or consultants tell them they should do. You either look at what everyone else is doing, or you put your head down, put out a great product, provide great customer service and move forward.”

And if you can laugh, and make customers laugh, so much the better. One Moscot brainstorming session for a metal frame line caused Simmons to blurt out the phrase “heavy metal.” That led to a photo shoot at a Brooklyn heavy metal bar, Duff’s, with artists such as Alex Skolnick (Testament), Chris Adler (Lamb of God) and Jesse Leach (Killswitch), all recruited via Facebook.

“It was a bad joke that became a good idea,” Simmons says. “Humor, fashion and history are part of everything we do.”

Postscript: Giving back as a major mission

Companies large and small love to put on dog-and-pony shows about giving and community involvement. Yet for Warby Parker and Moscot, charitable work defines them almost as much as their eyewear.

Warby Parker’s Blumenthal was a former director of VisionSpring, which gave glasses to people living on less than $4 a day. He was a driving force behind the company’s policy, from the outset, to give away one pair of glasses through VisionSpring for each one sold.

And if you can’t find Harvey Moscot at a retail store or in his office, chances are he’s giving eye exams to underprivileged kids through the Boys’ Club of New York, or tending to the Moscot Mobileyes Foundation, which seeks to eliminate financial and logistical barriers to quality medical eye care.

While Warby Parker wants to make money, “We also want to be an inspiration to other small businesses,” Gilboa says.

And as for Harvey Moscot, the foundation work is how he thanks the city that put his company on the map: “As a New York company, we’re really indebted to New York.”

(The author is a Reuters contributor)

Editing by John Peabody, Ryan McCarthy and Brian Tracey

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