During grad school, four friends invested $120,000 to launch a startup that now generates $670 million annually.

If Dave Gilboa had kept better track of his glasses, Warby Parker might not have been founded.

In 2008, Gilboa lost a $700 pair of Prada eyeglasses on a backpacking trip just before starting an MBA program at the Wharton School of the University of Pennsylvania. He met classmates Neil Blumenthal, Andy Hunt, and Jeff Raider, who shared his frustration.

The classmates, within months, established Warby Parker, a direct-to-consumer eyewear brand that has sold millions of pairs of glasses and operates in 269 brick-and-mortar stores across the U.S. and Canada, eventually disrupting the nearly $150 billion global eyewear industry.

Last year, Warby Parker generated approximately $669.9 million in revenue and has a current market value of $1.79 billion. The company is led by co-CEOs Gilboa, 43, and Blumenthal, 44.

Profitability remains the final challenge for many direct-to-consumer brands, frequently resulting from narrow profit margins. Warby Parker is on the verge of achieving this goal, as it generates more revenue from physical stores than online sales, with in-store eye exams contributing to additional income. As a result, the company plans to expand its brick-and-mortar presence.

As soon as next year, the company can achieve profitability and stability, according to industry analysts, who say that this is a simple strategy that has eluded many of its competitors.

"Blumenthal tells CNBC Make It that the demand for glasses and contacts is increasing and Warby Parker is well-positioned to capitalize on this growth."

Launching 'the Netflix of eyewear'

In February 2010, Warby Parker was launched by four co-founders who were still full-time students. They used their savings, totaling $120,000, to fund the company. Blumenthal utilized his connections with eyewear manufacturers from his previous job at VisionSpring to create Warby Parker's initial inventory.

According to Gilboa, we poured our life savings into starting the business, which meant running it out of Blumenthal's apartment and not taking any salaries.

The fashion publicist was hired to increase visibility for Warby Parker, which was launched and quickly overwhelmed with orders. The articles in Vogue and GQ described it as "the Netflix of eyewear," and Warby Parker hit its first-year sales targets within three weeks.

To accommodate customers' requests for in-person try-on of glasses, Warby Parker's co-founders converted some of their office space into a showroom after establishing headquarters in New York. This move led to $3 million of annual sales from the office, according to Blumenthal, marking a "light bulb moment" for the company.

In 2013, Warby Parker launched its first physical store in Manhattan's SoHo neighborhood. Over $440 million in revenue came from retail stores last year, accounting for more than two-thirds of the company's total earnings. The co-CEOs aim to eventually have over 900 locations.

Blumenthal states that they will open 40 stores this year and plan to maintain this pace in the future.

Profitability in sight

Despite Warby Parker's annual revenue growth, the 14-year-old company has yet to become profitable. Blumenthal and Gilboa argue that Warby Parker's adjusted EBITDA figure of $52.4 million last year demonstrates financial viability.

According to Anthony Chukumba, managing director and analyst at Loop Capital, Warby Parker is expected to be solidly profitable from a net income perspective by next year. The company has no debt and generates free cash flow, allowing for continued growth.

Blumenthal and Gilboa plan to transform Warby Parker into a "comprehensive vision care company" by expanding its stores into a "one-stop-shop" for customers' eye care requirements, according to Blumenthal. During a recent earnings call, Blumenthal stated that incorporating eye exams into retail stores boosted Warby Parker's average revenue per customer by over 9% last year.

The number of active customers increased by 30% from 2019 to 2023, with the company having over 2.3 million of them in 2023, as per a Make It analysis of SEC filings.

In contrast to the industry's leading companies, Warby Parker is relatively small. Despite being the parent company of Ray-Bans and Oakley, EssilorLuxottica reported over $28 billion in sales last year. Blumenthal believes that there is still room for growth in the global eyewear market, which is why he is confident in setting ambitious goals for the company.

He states that he desires Warby Parker to be among the most cherished brands globally.

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