Warby Parker isn't glasses. It's "vision."

Wednesday, November 20, 2019 by Robinhood Snacks | Disclosures

"Todd, do you know if the Warby lenses make me look bloated?"

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Hey Snackers,

Can't make this up. The Winklevoss twins of Facebook-ish fame have been busy running their own cryptocurrency exchange, which just made its 1st acquisition — a startup run by another set of twins.

Markets dragged down because Home Depot botched its own virtual renovation (more on that below).

1. Home Depot stock falls 5% because it botched a website job

Home Depot renovated its website... Looks terrible. The Atlanta-based chain's sales rose 3.6% last quarter — that's less than what investors expected, so shares fell 5%. Plus, Home Depot downgraded its outlook for the rest of the year. Strange, because yesterday we also learned that 1.3M homes began construction in the US last month. That should mean big Home Depot businesses.

Windows, not websites... One big reason for the miss was Home Depot's botched web development renovation (not exactly its specialty).

  • 45% of Home Depot's sales come from professional contractors, the other 55% coming from "DIY" customers (like us).
  • Since pros know the difference between an Allen and a Phillips head, HD is building them a personalized online shopping experience.
  • But like all renovations, this project isn't going well. Investors hoped it would lead to new sales last quarter, but development delays messed with that.

Home Depot's performance is ruled by an 80/20 rule... 80% depends on macro issues it can't control: the housing market, tariffs, and the price of lumber. The other 20% depends on HD's actual performance. Those percentages aren't exact, but you would've expected more from the current situation:

  • Home prices are high, so DIY homeowners might splurge on re-flooring that bathroom with fresh marble.
  • House construction hit a 12-year high last month, so pro contractors should be busting down HD's doors for fresh 2X4s of timber.
  • But HD suffered last quarter because it missed on the part it can control.

"The Warby Parker of Warby Parker"... is Warby Parker. The OG direct-to-consumer brand basically created the cut-out-the-middleman digital-first concept 9.5 years ago with eyeglasses. Then it noticed something: 40% of its customers also wear contact lenses. So it's launching Scout, its own brand of contact lenses.

Close one eye and read the letters on the chart... If you're still squinting to understand why Warby created Scout, just look at the prices — they un-blur the broader strategy:

  • $95 = typical Warby glasses
  • 2 years = the average amount of time before most Americans replace their glasses
  • $110 = a 3-month supply of Scout contact lenses (delivered to your door, of course).
  • 3 months = that's how often Warby lens customers will pay up for refills — which is $440 for Warby every year.

We're calling this the "Sequel Strategy"... and we noticed it's trending with Warby's fellow direct-to-consumer unicorns. With a Sequel Strategy, companies spinoff their 1st long-lasting product with new shorter-term ones to snag consistent revenue from the same customers. Here's who's doing it:

  • Warby sells you glasses every 2 years — but you buy Scout lenses in between.
  • Casper sells you a mattress every ~10 years — but you buy its new sheets and pillows in between.
  • Allbirds sells you shoes every ~2 years — but you buy its new socks (you get the picture) in between.
What else we’re Snackin’
  • Hookup: Capital One is offering exclusive restaurant reservations as a reward through OpenTable
  • Broadcast: Roku stock drops 4% after the little-streamer-that-could plans to sell 1M shares of its own shares to raise money
  • Retail-pocalypse: Macy's drops 11% after it was hit with a data breach (blame it on the ol' "unauthorized computer code")
  • Subscribers: Netflix suffered "little-to-no impact" in terms of lost subscribers from the Disney+ launch
  • #tryhard: Facebook unveils its own meme-making app: Whale
  • Curate: Spotify bites deeper into podcasts by launching curated pod playlists aka "Your Daily Podcasts"
Snacks Daily Podcast

Microsoft was threatened by Slack, so it launched a knockoff rival messaging service called Teams — we just learned it’s got 20M users vs. Slack's 12M.

We're jumping into "The Incumbent Advantage" on our 15-minute Snacks Daily pod.

↓ Listen below ↓


ID: 1017141

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