Popular eyewear brand Warby Parker lists on the New York Stock Exchange on Wednesday.
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The company’s one of several venture-backed consumer companies to go public through a direct listing in 2021. Other venture-backed companies to go public through a direct listing this year includes gaming company Roblox and cryptocurrency trading platform Coinbase.
But perhaps what’s most interesting about the company’s IPO centers around the fact that Warby Parker is also one of the earliest online direct-to-consumer companies to grow an expansive retail presence (the company currently has more than 145 retail stores).
People loved them
Warby Parker, founded in 2010, came up on Siegel’s radar after the company was discovered by a Menlo analyst, who noted that it was one of the only startups they could find that had a higher net promoter score than Apple.
A net promoter score measures customer experience and can be an indicator of business health.
“It was great that they had this net promoter score and that people loved their glasses,” Siegel said. “What really intrigued me when I met Neil Blumenthal and David Gilboa was they had found this market that they had a lot of research on that was ridiculously vertically integrated.”
The eyeglass industry was dominated by several large players, and the margin dollars that could be extracted by a glasses company going direct-to-consumer were enormous, Siegel said. With Warby Parker, consumers could try on glasses virtually, try on different frames at home, and ultimately buy prescription eyeglasses online for less money. Also, the company donates a pair of glasses to a person in need for every pair sold.
Menlo was investing in consumer startups at the time, but wasn’t particularly looking to invest in a company just aspiring to be a large consumer brand.
It was the business model that did it for Siegel.
He wanted Menlo Ventures to invest, but Warby Parker didn’t want to take venture dollars at the time. So, Siegel made a personal angel investment in the company in 2011 as a toehold.
Warby Parker got its first venture capital funding in 2011, when it raised $1.5 million from investors including Lerer Hippeau and First Round Capital. Later in the year, it raised a $12 million Series A led by Tiger Global Management, with participation from investors including Menlo Ventures and WME Ventures.
It should be noted, however, that as common as it is now to see Tiger Global Management lead funding rounds for both early- and late-stage startups seemingly every other day, Tiger wasn’t as active back in 2011, per Crunchbase data.
The company went on to raise a $41.5 million Series B in September 2012, a $60 million Series C in December 2013, and a $100 million Series D in April 2015.
Here’s a full listing of its funding history:
Most recently, the company raised $120 million in a Series G in August 2020, valuing it at more than $3 billion.
The company marks Menlo Ventures’ third consumer public exit this year (following Poshmark and Rover). Some of the biggest winners of the direct listing will be Tiger Global, T. Rowe Price, General Catalyst, D1 Capital Partners and Durable Capital.
“(Warby Parker) just created this very loyal base of early consumers and it kind of grew and took off from there,” Siegel said.
Illustration: Dom Guzman
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