Dave Gilboa co-founded Warby Parker in 2010 with three friends, while all were earning their MBAs at the University of Pennsylvania’s Wharton School. Today, the originally online-only eyeglass seller has 352 storefronts, makes its own lenses and is approaching $1 billion in annual sales. The company has a market capitalization of $3 billion–its stock, trading around $24, is up 6% from January but is just half its opening trading price five years ago, just before the Covid-19 e-commerce stock bubble burst.

Now, the company is close to one of its biggest product launches ever, with its Google-based “Intelligent Eyewear” line of artificial intelligence glasses set to debut this fall, which could shake up the burgeoning smart glasses sector.

Bottom line: Gilboa, co-CEO since Warby Parker’s launch, has led what any entrepreneur would consider a successful venture, but he’s had his share of ups and downs along the way.

In an interview with Forbes , Gilboa, 45, shared some of the lessons he’s learned. With the benefit of hindsight, he says, it’s clear that even hurdles and mistakes can be opportunities for success, as long as company founders are willing to pivot.

Own Up to Customers When You Make Mistakes

“Probably the most important lesson to come out of all of that is that when you make mistakes - and every company does, especially in the early days - that it’s an opportunity to show customers how much you care,” Gilboa says.

One early misstep that the founders turned into a great play for customer loyalty, Gilboa says, was when they collectively decided to go with the cheapest possible option for their first company website. “We should have spent much more time focused on the return that we were getting for our dollars,” Gilboa says. “In some cases, it does make sense to pay up for expertise.”

That situation then led to Warby Parker under-ordering its first-ever inventory run, which caused a backlog of thousands of customers waiting up to nine months to receive their orders.

“As founders, we felt terrible,” Gilboa recalls. To smooth things over, the company contacted every single customer who was forced to wait and offered them special deals as an apology.

“We gave a bunch of people free glasses or big discounts on glasses at a time when we had no money and really couldn’t afford to do that, but it showed people how much we cared,” Gilboa says. “We found that customers were willing to give us another chance and they were so grateful for that outreach and it was so different from what they’re used to hearing from bigger brands and bigger retailers.”

Scarcity of Capital Creates Clarity

A lack of capital at the outset also became part of Warby Parker’s success story, Gilboa says, because it forced the founders to innovate. The quartet of founder-friends were only able to cobble together $120,000 of seed capital at the outset, which left them scrambling for creative solutions to various problems since they didn’t have cash to throw at each issue that cropped up. That lack of capital, for instance, was the reason the four chose the cheapest possible website, Gilboa says.

“An important lesson for us in those early days was that scarcity creates clarity, that when you only have a limited pool of dollars and a very small team and a limited number of hours in the day, it really forces focus,” Gilboa says. “We knew that we couldn’t compete with the big optical retailers at the time. We couldn’t afford to open a store. We couldn’t afford to advertise. We knew that we really had one opportunity to launch. We had one opportunity to grab people’s attention. And to do that, we had to have a really differentiated product, a really differentiated message.”

That led to Warby Parker’s home try-on program, Gilboa says, which proved to be the rocket fuel the company needed to really establish itself as a force in the marketplace. Almost immediately, Gilboa recalls, the company had a wait list 20,000 customers long, which was also part of what caused the months-long backlog, which the founders were able to turn into a customer loyalty play with special deals.

“We had such conviction in the quality of the product that we were willing to spend significant sums to send inventory out to customers, pay for shipping both ways, really make it as risk-free as possible,” Gilboa says. “Some of those early decisions and creative solutions to challenges may not have emerged if we had access to a lot more capital in those early days.”

Also in hindsight, Gilboa says, it probably would have been an easier road if the Warby Parker team had had a bit more cash on hand, so one of his pieces of advice to startup owners is to “really hone in on the most critical aspects of their product” prior to going out to raise capital. That focus brings clarity of purpose, Gilboa says, which can translate into both successful fundraising and capital deployment.

Listen to Customers and Adapt

Another important lesson, Gilboa recalls, came when Warby Parker ramped up its communications with customers, and realized that its initial online-only sales plan wasn’t quite enough; they’d have to open brick-and-mortar storefronts to really scale as they wanted, in part because of high demand that couldn’t be met with the company’s signature home try-on program.

“We learned that by mistake,” Gilboa says. “We started getting calls from strangers all over Philadelphia, where we were based at the time, for your home try and wait list. ‘You’re telling me it’s going to be six months before you can ship me inventory. Do you have a store or office that I can come into?’”

So in 2013, barely three years after launching the company with an online-only retail setup, Warby Parker opened its first physical store, in New York City’s Soho neighborhood. And that sparked even more interest in the growing brand, Gilboa says, to the point that now, about two-thirds of all Warby Parker sales are made in its 352 stores instead of on its website.

“We learned so much from those face-to-face interactions and we found that people loved getting a peek behind the curtain and getting more color on the brand and what we stood for, that led to lots of word of mouth and additional sales and customers,” Gilboa says.

To him, Gilboa says, that memory means that entrepreneurs should never wed themselves too much to a given business concept, because there may be a slightly different model that works even better.

“A broader lesson is not to get married to the initial elements of your business that may have brought success, that you should always constantly be questioning assumptions, always be listening to customers, getting feedback, looking at the data to understand when it makes sense to evolve your model,” he says.

Invest for Long-Term Success

Perhaps the most important lesson for startup founders, however, centers on sustainability and when exactly to invest back into the company instead of pocketing the profits. Gilboa says that prioritizing profits in the short-term, instead of putting cash back into the business, can undercut long-term success.

“Our lesson to founders is not to focus on a single financial metric, but understand the economic engine,” Gilboa says. “Companies can turn off all investment, they can turn off all their customer-friendly policies, and those things are going to lead to a short-term boost in profits, but they’re probably going to be detrimental to that brand and that brand’s growth and profitability over time.”

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