It may be less flashy than its eCommerce counterparts Zalando or Fab but online eye wear store Mister Spex is quietly working away in the background to become the market leader in Germany.
Launched in Berlin in 2007, Mister Spex received funding and support from company builder Team Europe (also a shareholder in VentureVillage) and last year made €26m in revenue. European expansion is now on the cards for the company, which is currently available in Germany, France, Sweden and Spain.
We caught up with founder and Managing Director Dirk Graber to talk becoming profitable and how Google Glass will revolutionise the future of the eyewear industry…
Hi Dirk, what’s your background? Were you always keen to be an entrepreneur?
I got the entrepreneurial bug during my studies in Leipzig. I was at a private university called HHL and during that time I did some internships, one at eBay when it was still small and young, and the other was at the Samwer brothers’ company Jamba. During this time, I got in touch with a lot of people who now run internet companies. I got a good view of the eCommerce and internet space.
After graduating, I worked at Boston Consulting Group for almost three years and did a lot of consulting for retail companies. But I knew I didn’t want to be a partner at BCG.
I wanted to do something myself and I talked to Lukasz Gadowski (founder of Team Europe), who I knew through my studies at HHL, and derived that based on my experience I could probably create the most revenue with eCommerce.
I decided on eCommerce without knowing which product. We looked at shoes first, but that takes a lot of money to build. We realised we couldn’t raise enough funds to grow a business with substantial value in this area.
Subscription glasses are much harder to sell, but on the other hand if you understand how to do it and once you succeed you’re hard to copy and don’t have much competition in the market. So we decided on prescription glasses for that reason. The other is purely commercial – the market is five billion in Germany alone, including contact lenses, and the profit margins are quite high.
How did you solve the problems people had with buying glasses online?
The development of the virtual mirror was a big help, where users can try on the glasses and see what they look like through their webcam. The free home trial was also a great idea. That was a risk, because you have to take on the first costs, but on the upside you also see great rewards.
The other solution was the retail partnership program, where customers can go to optical shops and get an eye test, which they buy for €9.90 on Mister Spex. This amount is taken off the price when they buy glasses from us, so the test ends up being free for the customer. They can try on the glasses in the shop too and then order them on Mister Spex. So it started as a small setup, with 30 partnerships. But then it worked for both sides, so we decided to scale it.
Are you making a profit yet?
Not yet, we want to make a profit next year.
What was the biggest challenge you had when you launched Mister Spex?
There were two major ones: The first was convincing suppliers to work with us, which we had to do because we wanted branded products on the site to avoid just being in the private-label discount segment.
The second one was finding the right marketing channels to target. It took a while to adjust the right message for the channel and to scale the campaigns.
What’s in the works for Mister Spex this year?
We will probably grow at a similar rate as last year – so double digit percentage growth. Becoming profitable and having more prescription glasses plus developing the retail partnership program are the most important things on the agenda.
Do you think the eye wear industry could move purely online?
Purely online is only ten per cent of market share, that is all that’s possible with the current technologies. But you never know as a lot of technology is still being developed. Users have to do the eye test in a shop and adjustments there are needed – I think the future is combining physical stores with online ones.
Would you consider branching out into other areas?
We are going to focus on the optical market. We built up a brand that transfers a lot of trust, it’s not an option to dilute the brand to sell other products. We still have so many opportunities to tackle within the industry – we’re just at the beginning. We’re looking at expanding, and at more partnerships.
What markets are you targeting next?
We will think about the Netherlands, Switzerland and have more focus on Austria.
What’s your opinion regarding clones?
I don’t have anything against them. It’s a valid business model, especially taking concepts to other markets. The problem is I think clones don’t have a very strong USP, so they need a lot of money or to be in a market where winner takes it all, in which case speed is important. This isn’t the case in our market. Even if there is a market leader in Russia today, it doesn’t mean that’ll be the case in a few years, plus there is always room for competitors.
What do you see in the future of eye wear? Google Glass is a pretty exciting development in the field…
What is most important is that eye wear is more of an accessory. It’s fun to buy glasses, which wasn’t the case ten years ago, then it was for medical reasons. People are more open minded, technology develops so we can sell glasses online more and more easily.
In the future, glasses will be more interactive. I read that Google and, I think, Kleiner Perkins have a dedicated fund just for supporting developers who make apps for Google Glass. So I think it will be an interesting product in the future. It won’t just be a medical device, but also a phone. So in the future you might not even need a phone, you might just need glasses.
How do you compete against new technologies like laser eye surgery? Have you seen a drop in sales because of it?
The question about LASIK always comes up when we do financing rounds. But it is something which only cures a certain percentage of the population, and it is risky.
What is some advice you’d give other entrepreneurs?
I think it’s important to have a clear vision. You should have a valid business model and be aware of the drivers of the model and how to tackle the market. I’m also a friend of founding a company as a team, because you need a lot of different skill sets to run a company. And at different times new skills might come in handy. So I am a big fan of building a team that will be helpful for at least the next three or four years.
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