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Can Warby Parker break the DTC curse?

Good morning! This Thursday, Warby Parker proves that growth does not equal profits, the NFL is getting in on NFTs, and YouTube cracked down on anti-vax content.
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The endless parade of tech hearings is ... mostly a giant waste of time. But today's might be different. Antigone Davis, Facebook's global head of safety, will testify to the Senate Commerce Subcommittee on Consumer Protection, Product Safety, and Data Security today at 10:30 a.m. ET about Facebook's effects on children, and what the company is doing (or not doing) to keep kids safe online.
Warby Parker went public via direct listing on the NYSE yesterday. The glasses retailer saw its shares jump to more than 35% above the reference price of $40 per share. That put its market cap at nearly $7 billion, more than double the $3 billion valuation it garnered from a private funding round in the summer of 2020.
Warby Parker's S-1 tells an important story, of a company struggling to turn growth into profits. It generated $393.7 million in revenue in 2020, and it's on track to have an even better year in 2021: The company recorded $270.5 million in the first half of the year, up 34.7% from the same period in 2020.
The biggest hurdle in the way of its profitability are SG&A costs. The line item, which includes employee salaries and marketing costs, was equal to 73% of net revenue in 2020 and 62% in the first half of 2021. While Warby Parker is on track to continue growing, its path to profitability still isn't clear.
Tech investors are often willing to accept sustained losses in a company's growth stage, but Warby Parker isn't necessarily a tech company. By its own account, Warby Parker purports to be a "founder-led, mission-driven lifestyle brand that sits at the intersection of technology, design, healthcare, and social enterprise."
Still, it cites "continuous innovation" as a differentiator in the optical sector, and as something that provides "a strong competitive moat." For evidence, Warby Parker points to the launches of a telehealth app and blue-light glasses in 2018, and virtual try-on and private-label contact lenses in 2019. Some of these are really a stretch to categorize as tech.
Warby Parker has established itself as a VC darling of the early DTC era since its launch in 2008. That funding has helped build it into a household name, but might not translate into a sustainably profitable business in the long term. At a time when just about every sizable retailer has an online presence, it's worth asking why the public tends to view companies like Warby Parker and Casper as tech and just not regular retailers. This is especially true when those DTC darlings are shifting in the opposite direction and rapidly scaling up their brick-and-mortar footprints.
And by the way, there's nothing wrong with being a retailer! I'll still buy my next pair of glasses from Warby Parker, even if unsubscribing from their email list was one of the better decisions I made in 2021.
By scrutinizing facts and including all voices, we can achieve public consensus faster and take well-informed collective action against the many challenges our world is facing. Embracing facts, new technologies, and science is our shared responsibility and the least we can do to drive positive change for the world.
Shortly after John Carreyrou began covering Theranos, Elizabeth Holmes wrote a note to herself:
Money manager Jeff McCroy is pushing Apple to address child sex abuse in videos:
Sen. Cynthia Lummis said stablecoins should be issued through money market funds or a similar approach:
The NFL is getting into NFTs. Dapper Labs is partnering with the football league to make NFTs of digital-video highlights from games.
Twitch is adding security features to help stop hate raids, including a tool that lets creators require phone verification before viewers can chat with them.
Gary Wipfler retired from Apple, sources told Bloomberg. The company's corporate treasurer had been with Apple for decades.
Bruce Vaughn is joining Airbnb as VP of experiential creative product. The former Disney exec will oversee a new team focused on the company's offline products.
Amelia Generalis is heading to Opendoor as chief people officer. She's held top jobs at companies like Anaplan and Electronic Arts.
Everyone loves TikTok, but there's always been some speculation around it. Pakistan has raised concerns about its content, India banned the app, and even former President Trump threatened to ban it. But it's still doing well regardless, and Chris Stokel-Walker gets into that success story in the book "TikTok Boom."
Stokel-Walker talks about whether concerns around the app are warranted, and how TikTok has dominated the social media world in just a few years based on interviews with people connected to the app. The book was already released in the U.K., but it's available in the U.S. today.
(Editor's note: Stokel-Walker has also written for this publication.)
By scrutinizing facts and including all voices, we can achieve public consensus faster and take well-informed collective action against the many challenges our world is facing. Embracing facts, new technologies, and science is our shared responsibility and the least we can do to drive positive change for the world.
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