The Warby Parker of IPOs?
Tongues started wagging late last week that the eyeglass disruptor was headed for an initial public offering. But this is not the first time the company has been seen inching toward the public market — which most people, including many at the company, see as its eventual home.
“As we’ve said before, we’ve always viewed an IPO as a financing opportunity and it’s a likely outcome at some point, though we don’t have immediate plans to go public,” said a spokeswoman for Warby Parker. “We’ve been able to raise capital at favorable terms in the private market and have plenty of cash on our balance sheet.”
The company has raised more than $500 million since it was founded in 2010, including through a Series G round last year that was said to value the business at $3 billion.
Warby Parker might see an IPO as a financing opportunity, but it is likely that the big money investors that have backed it also see something else as well.
Investors put money into private businesses betting on big returns. And while they can flip their stakes to other large investors coming in — an IPO, when those savvy investors trade off to the general trading public, is usually seen as the prize.
A Warby Parker offering seems much more a matter of when than if.
And there are more paths to Wall Street these days with the mania of special purpose acquisition companies rushing to make deals. SPACs are management teams that have raised money through their own IPOs with the promise of doing a deal, leaving the company they bought as publicly traded.
If SPACs don’t spend the money, they have to give it back to investors, often within a couple years. So far this year, SPACs have raised $90 billion, on top of the $82 billion raised last year, according to Dealogic.
An offering or sale to a SPAC would open up Warby Parker’s books to the public, revealing the economics behind an idea that not only disrupted the eyewear market by cutting out the middleman and going direct to consumer, but spawned a kind of disruptive movement.
In the 2010s, it became common place for a start-up looking to make noise, raise money and similarly upend the traditional structure of a sector to be declared “The Warby Parker” of whatever they sold.
Most of those mini “Warby Parkers” never really took off or are plugging away, still doing battle with the status quo as they build their place in the market. In many cases, the newcomers found themselves trading one sort of cost, a longer supply chain, with new expenses for customer acquisition.
Surely, the e-commerce and direct-to-consumer revolution has come but not quickly, and winning with e-commerce was not as straightforward as many disruptive newcomers suggested.
Behind it all has loomed Warby Parker.
The first wave digital disruptor not only survived, but has continued to grow and become a stand in for a whole new way of doing business.
As the business grew, the question from the outside became: Is the Warby Parker still the disruptor running away with market share and mega bucks or, as it matured, did it morph into something closer to a traditional retailer with the costs, concerns and profit profile to match.
That is a question that will be answered when the company does finally make its move with an IPO.
Regardless, the retail industry has painfully and slowly — and with the added kick of the coronavirus lockdowns — learned the lessons of Warby Parker and is now striving wholeheartedly for a much more digital and direct approach it pioneered.
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