Challenging the consumer giants
Jeff Raider has helped pioneer a high quality, low cost model for selling consumer products like glasses and razors online. He tells Jonathan Moules how he did it.
Presented by Jonathan Moules and produced by Fiona Symon
Hello, I'm Jonathan Moules, and you're listening to "FT Startup Stories," a weekly show in which I talk to founders about the joys and challenges of starting a business. Jeff Raider tested out his first business idea while at business school. And the lessons he learned provided a kind of template for Harry's, a low-cost, high-quality razor. He told me how he and his co-founder Andy Katz-Mayfield got started.
So Andy and I interned together, and then we worked together after our internships. And then we both went to business school, which, at the time, was a reasonably logical path for us. I got to business school, and pretty early on one of my good friends there had the idea to sell eyeglasses online. And at that time, my prescription had changed a few times, and I hadn't changed my glasses because they cost so much. I was a student. And so we got excited about the idea of launching our own brand of glasses that helped people really express their own identity through their glasses, selling them directly to customers, and doing so at an affordable price.
So our price point on glasses was $95, which was like a quarter of what similar glasses are sold for in stores. And were able to do that because the value chain in glasses had a bunch of different steps in it where there were unnecessary markups. And so we were able to sort of streamline the whole process, design and source our own glasses, and then sell directly to customers. And that company is called Warby Parker and was a really transformative experience for me.
The Warby Parker story happened because one of my good friends had worked in health care and had seen all of these health care models become disrupted by more affordable approaches and had always worn glasses and that believed that there was an opportunity to do that there. It was just an idea that he had. And then he talked to me about the idea.
We had no idea that anybody else was doing this outside the world. And when we looked around, there were a couple of people who had moderate traction but nobody who had our vision for building a really distinct brand, delivering it to customers in a way that made them feel like it was special, giving back to the community. So we give a pair of glasses a way for every pair that we sell.
At the same time, you were doing an MBA.
We were. So we launched the company actually while we were in class. Like turn the website on, and then went to class, which was a crazy experience. We graduated, but just barely. And I think that the thing that was great about doing it in school is that we had a group of classmates and professors who really supported us.
We'd go talk to professors after class and said, the Coke versus Pepsi case there we're studying in class is interesting. But we actually have a real business problem. Can you help us figure out how to solve this, how to build a brand, how to price our products, how to think about distribution, how to order inventory? And so we used a lot of the knowledge that existed in that community to help us build and launch the brand. And from the moment we turned the site on, we were just blown away by the response.
The crazy part for me personally was I had worked at an investment fund before school. They'd paid for me to go to business school. So I knew I had to go back afterwards. So I didn't have debt, but I used debt. So I borrowed some money and then invested it into Warby Parker. And that was one of the ways that we got funding for the early idea for Warby Parker. So it was all of our own funds to go build that company.
The idea was born out of a personal frustration and personal pain point. And we had a vision for how to do it better. When we started researching the market, we kind of learned how other people were approaching it. And that helped us figure out how we wanted to be different. And the same thing is true with Harry's.
So the way that Harry's started was I had graduated from school. Andy and I had stayed really close, and I talked to him a lot about Warby Parker. And I was back at investing but still pretty actively involved in Warby Parker on the board and working on it nights and weekends.
I was feeling more and more, though, like Warby Parker was fun and that working in my day job felt more like work. And so I was wrestling with those things. And Andy called me and said, hey, I just had this experience. I went to a drugstore. I waited for 10 minutes for someone to unlock the case where the razors were being held.
I paid $25 for four razor blades and some shaving cream. It's not the $25 that really bothers me. It's the fact that I know that these products cost a fraction of that to make. I'm just feeling like I got ripped off.
Could you take some of what you guys learned at Warby Parker and do it better here? And I just remember sitting back in my chair and being like, oh, here we go again. It just felt like the early days at Warby Parker. I felt like we could create a better experience around shaving for guys.
And maybe having done it once, there was the feeling it may be easier?
For sure. I think what was helpful is that there was a roadmap for how to build a brand that we had forged Warby Parker that we could apply to Harry's. And one of the things I learned in the Harry's process is that it's never one to one. There's always nuances in a business that you actually have to really take into account that are important and different. But for sure, I had a perspective for how we could launch the brand and an idea for partners who could be helpful to us who had been helpful to us early on at Warby Parker. And so that was very helpful.
Harry's is a subscription model. Can you explain that?
So we don't only offer subscriptions. We sell direct online. The reason that we wanted to sell to guys directly was because we felt like there was a real pain point going into the store and having to wait for 10 minutes for someone to lock that case and then wait in line. And guys don't like it.
They find it to be a traumatic experience. So we felt like we could deliver them a better experience, by and large, by selling to them online. Online you can buy two wa--