Warby Parker

Warby Parker cracked the code that killed Casper: DTC retail achieves sustainable unit economics only when digital efficiency combines with physical presence, not when it relies on either alone. The company generated $771 million revenue in 2024 (up 15%), turned GAAP profitable in Q1 2025 ($3.47 million net income versus prior-year $2.68 million loss), expanded adjusted EBITDA 40% to $73 million with 9.5% margins. It operates 287 stores capturing 1% of the $68 billion US eyewear market, plans 45 new locations in 2025 (including 5 Target shop-in-shops), projects $878-893 million revenue in 2025 (14-16% growth). This is convergent evolution reaching stable equilibrium: omnichannel beats pure-play digital.

The biological insight: network effects require physical nodes to capture full value. Warby Parker's try-at-home program generated early growth through digital virality, but stores drive average revenue per customer up 6.8% while increasing active customers 7.8% to 2.51 million. Gross margins improved to 55.3% (from 54.5% in 2023) as store density enables inventory efficiency, local fulfillment, same-day service. The Target partnership extends distribution without full capital commitment—using existing retail infrastructure like hermit crabs using abandoned shells. The $150 million Google partnership developing AI-powered smart glasses addresses the strategic gap in next-generation eyewear while competitors race ahead.

Resource allocation discipline separates Warby Parker from failed DTC peers. The company controls operating expenses tightly (enabling margin expansion during growth), maintains $254 million cash (no distress risk), opens stores only in validated high-traffic locations, and invests in technology (virtual try-on, prescription verification, inventory management) that compounds efficiency over time. Co-CEO Dave Gilboa's quote reveals the philosophy: "unmatched value proposition combined with high-quality execution." Translation: competitive advantage comes from operational excellence, not just brand storytelling. Most DTC companies burned capital on customer acquisition assuming scale would solve economics. Warby Parker built sustainable unit economics first, then scaled. The difference: one strategy survives market corrections, the other becomes acquisition bait.