The Genius of Money Part 3: An Interview with Jacob Needleman

Jacob Needleman is a professor of philosophy & the author of Money and the Meaning of Life. His interview with Mr. John Bloom served as a very interesting conversation regarding money and the relationship people have with it.  The most interesting remark Mr. Needleman made was that:

“The desire nature can be inflamed or turned into craving, or egoistic fantasy, so that it becomes what we call obsessed-where the body’s desires or social desires become the sole source of meaning. Then, desire becomes a problem and an illusion that one has to work to dispel, because one is trying to get from these desires something one can only get from a relationship with something higher in oneself. Desires are meant to serve a human being’s life, but they’re not the main aim in life.”

I think that these statements are so incredibly true and often overlooked. There is nothing wrong with having a desire to do/obtain something. However, when a person becomes obsessed with the “end result” and forgets about the trials, tribulations, and journey needed to achieve this result, they feel unsatisfied. The millennial generation is notoriously known for needing instant gratification and really struggle with the concept of embracing “the journey” and everything that comes with it. I agree that desires serve a purpose-they should drive people to push themselves to excel, and achieve great feats. Nevertheless, people should examine these desires and reflect upon their roots. People need to ask themselves: “Why do I want this? Why am I doing this? What is missing from my life that makes me believe that I should pursue this goal?” There are some things in life that, as Needleman states “one can only get from a relationship with something higher in oneself” (Bloom 118).

The Genius of Money: Part II, Chapter 3

Chapter 3: Just Money and Social Finance
By Sulekha Ramayya and Mary Ramzy

This chapter starts by talking about how money has changed from being part of a "brilliant accounting system" to become "corrupted and exchanged for profit-driven endgame of control over natural resources and human manufacture". It is ironic how money is both a source of pleasure and pain. Social finance places importance on social benefit in financial affairs. For example, in a loan situation it is in the mutual interest of the lender and the borrower for each other to succeed. Although lending is beneficial to funding growth in society, recent predatory practices like Payday lending have turned financing into an extractive industry.

The chapter then goes on to take about the injustice and corruption of the current global money system (an argument quite similar to that of Bernie Sanders). The author believes that the principle of altruism will come to replace the "driving forces of self-interest and accumulation". The rise of social enterprises and concepts like fair trade is evidence that this change is taking place today. Fostering a sense of community is part of this transformation and the concept of microfinance has facilitated this change in the developing world. The author firmly believes that we need to use social finance to empower individuals as opposed to using traditional finance which can tend to exploit individuals.

The Genius of Money: Chapter 5 & 13

Chapter 5: Reforging Adam Smith-Beyond the Gates of Self Interest
by Fabio Martello & Mary Ramzy

Adam Smith, known as the father of economics, believed that self-interest and competition were two key factors that would guide the economy. Nevertheless, author John Bloom analyzes the social paradox this theory has built in it. He points out that "the shadow side of Smith’s socio-economic theory is created when an individual’s (or corporation’s) self-interest turns to greed and suffers from the condition of 'never-enoughness'"(Bloom 19). As the gap between the rich and the poor widens, and the presence of the middle class seems to diminish, this shadow seems to be growing in size. The author also references to JP Morgan and the Federal Reserve and how they handled the recent economic crisis. 

This chapter also focuses on technology and its limitations in being able to solve the world's largest problems. Bloom references the speech Bill Gates gave in 2008 at the World Economic Forum. Gates claims that technology does have immense capabilities to solve problems and to improve the lives of the underprivileged. Nevertheless, he states that "[technological] breakthroughs change lives only where people can afford to buy them – only where there is economic demand. And economic demand is not the same as economic need” (Bloom 20). To support the argument John Bloom uses alternative currencies that use technology to provide a better service, like the TimeBanks, based on time rather than time.

Chapter 13: Money and the Modern Mind
by Mary Ramzy

Author John Bloom begins this chapter by stating that "among all the factors of everyday life, money and its attendant issues consume more of our conscious time than most of us would likely wish." This statement rings true, especially in today's society, which has become highly materialistic. Our society has become obsessed with not only making money but also with spending it! The American Dream has become one of materialism in which being branded a "Rich Kid of Instagram" has become "cooler" than being know as someone who's worked hard to make their way up from "the bottom of the food chain."

Bloom uses the fairytale "The Grave-Mound" by the Brothers Grimm as a metaphor to describe different individuals' relationship to money. I thought that it was a great way to show the various relationships people from different walks of life have with money. Nevertheless, I was surprised when the author claimed that "while each of us may identify with a different character, we are home to all of them for better or worse." As I continue to reflect on this fairytale and Bloom's statements, I have come to agree that that "we are home" to all of these characters. Bloom is simply trying to say that there will always be someone poorer than you and someone wealthier than you. This book, though at times a bit abstract, was a good read which really forced me to think about money and its relationship to society.

AMDP Investment Memo_Warby Parker

To: Professor Clark Hansen

From: Mary Ramzy, Principal, AMDP

Date: March 1, 2016

Subject: Potential Investment Opportunity—Warby Parker

Professor Hansen, you recently asked me to find a potential business investment that would diversify AMDP’s portfolio. After conducting extensive research, I am recommending that AMDP make an investment in Warby Parker, a prescription eyewear company. Warby Parker’s objective is to offer consumers designer eyewear at a reasonable price. Additionally, for every pair of glasses sold, Warby Parker contributes a monetary donation to a nonprofit organization that provides those in need with eyeglasses. The company’s objectives align well with our guiding principals: triple bottom line, corporate social responsibility, social enterprise and carbon footprint –

all of which are described in detail below.

AMDP’s Guiding Principles

Triple Bottom Line

The Triple Bottom Line is an accounting framework that incorporates three dimensions of performance: social, environmental, and financial. These dimensions are also known as the 3Ps’: people, planet and profits.

• ·      People: A measure in how socially responsible an organization has been throughout its operations.
• ·      Profit: The difference between the amount earned, and the amount spent by the organization throughout its operations.
• ·      Planet: A measure of how environmentally responsible the organization has been.

Corporate Social Responsibility

The World Business Council for Sustainable Development describes Corporate Social Responsibility (CSR) as “the continuing commitment by a business to contribute to economic development while improving the quality of life of the workforce and their families as well as of the community and society at large.”

Social Enterprise

There is currently no globally accepted definition of “Social Enterprise.” Nevertheless, Social Enterprise USA describes social enterprises as “businesses whose primary purpose is the common good. They use the methods of business and the power of the marketplace to advance their social, environmental and human justice agendas.”

Carbon Footprint

The US Environmental Protection Agency (EPA) describes the Carbon Footprint as “the total amount of greenhouse gases that are emitted into the atmosphere each year by a person, family, building, organization, or company.” Most environmental informational organizations measure carbon footprint by gathering and assessing information about lifestyle choices and business operations. It is important to reduce our carbon footprint in order to help our environment and reduce the effects of global warming.

Warby Parker

History

The idea for Warby Parker first came about when its founders[1] were still in school at the Wharton School of Business (University of Pennsylvania). Whilst on a backpacking trip, one person in their group unexpectedly lost their glasses. He spent the rest of his first semester of graduate school without them because the cost of replacing them was too expensive. Thus, the students felt the need to create an alternative solution to their friend’s problem.

The students formally founded the company in 2010 after participating in the Wharton’s Venture Initiation Program. Their goal was to give their customers fashionable eyewear at a fraction of the price. Warby Parker has been able to raise a substantial amount of money throughout the past several years via numerous rounds of fundraising. In April of 2015, Warby Parker was valued at 1.2 billion dollars (Roberts 1). This appraisal made the company “one of only a handful of online retail startups to grow beyond a $1 billion valuation before going public or getting acquired” (Macmillan 1).

Warby Parker has accomplished their original goal by “circumventing traditional channels, designing glasses in-house, and engaging with customers directly” (Warby Parker). In addition, the founders wanted to use their business to help those in need. This desire inspired Warby Parker’s core beliefs, which state that “everyone has the right to see” and that “glasses are one of the most powerful poverty alleviation tools in the world” (Robiscon 1).

In a very charitable manner, Warby Parker partners up with different nonprofits in order to help the one billion underprivileged people who lack access to glasses. The charities receive donations from Warby Parker, and with those donations, purchase glasses that they later distribute to entrepreneurs. The entrepreneurs undergo business training and thus, gain both skills and an income by giving eye examinations and selling eyeglasses. Meanwhile, those who would’ve otherwise never had access to glasses are being given access to eyewear. This model effectively creates jobs and brings sight to the world!

Disrupting the Eyewear Industry

Warby Parker decided to take on the vision industry, which is largely dominated by Luxottica Group—an organization that controls 80% of the industry (Weisul 1). The Luxottica Group is a mammoth corporation that owns: Lenscrafters, Sunglass Hut, Pearle Vision, Sears Optical and even the Eyemed vision care plan! The founders of Warby Parker have stated that the “companies that control this industry mark up glasses between 10x-20x” (Bobkoff 1). The founders thought that the best way to cut costs was to go directly to manufacturers and have their products made on the same production lines as their competitors. Warby Parker would still make a profit that wouldn’t make the consumers’ hurt.

However, the company didn’t just cut costs for consumers—they revolutionized the shopping experience, made it more convenient, and fun! Consumers are given the ability to go online and ship up to 5 pairs of glasses for free so that they may test out different frames. Once the customer has decided on their preferred frame, they send all of the frames back, mark their preferences, and send the company their prescription. Once the company receives this information, they make the glasses with the appropriate prescription and send them back to the customer.

Taking Risk out of the Business Equation

While at Wharton, preparing to write their business plan, the students consulted with one of their trusted professors for advice. The professor suggested they send out a market survey for research and development purposes. Here were their findings:

• 1.      Raise the price of your product to increase perceived desirability: “People’s willingness to purchase glasses from Warby Parker actually increased as the prices went up” (Weisul 1).
• 2.     Keep a good relationship with your clients: Warby Parker realized that “brands build relationships with customers just as humans do, through vulnerabilities” (Neil Blumenthal).
• 3.     Remember, research happens in the real world: Although the survey results were informative, the founders sought to have more face-to-face interactions with potential clients. (Weisul 2).

Warby Parker’s B-Corporation Report Card

B-Corporations are “for-profit companies certified by the nonprofit B Lab to meet rigorous standards of social and environmental performance, accountability, and transparency” (B-Corporation). Warby Parker gained its B-Corporation certification in 2011 and currently has a grade of 112.  The total possible number of points a company may score on the assessment is 200. However, thus far, the highest scores ever achieved by certified companies have ranged between 160-170 points. Therefore, given that Warby Parker is a young and creative company, there is still plenty of room for improvement that will allow them to achieve higher scores in the coming years.

Final Recommendation

Although the vision industry is currently dominated by Luxottica, with support from AMDP Warby Parker can continue to grow, profit, and give back to those in need. The company has garnered a positive reputation in the media due to their positive social impact and low cost model. However, it is their ability to innovate that differentiates them from other eyewear companies and makes them the perfect candidate to invest in. Given all of this research, I highly recommend investing in Warby Parker.

Works Cited

1.     Bobkoff, Dan. "Meet the Founders of Warby Parker, the Eyewear Company Disrupting the Highly Secretive Luxottica Monopoly." Business Insider. Business Insider, Inc, 30 Oct. 2015. Web. 04 Mar. 2016.

2.     "Buy a Pair, Give a Pair." Buy a Pair, Give a Pair | Warby Parker. Warby Parker, n.d.                Web. 04 Mar. 2016.

3.     "Corporate Social Responsibility." WBCSD - World Business Council for Sustainable     Development. World Business Council for Sustainable Development, n.d. Web.                   02 Mar. 2016.

4.     "Learn the Basics." Learn the Basics | A Student's Guide to Global Climate Change.                     United States Environmental Protection Society, 3 Mar. 2016. Web. 04 Mar.              2016.

5.     Macmillan, Douglas. "Eyeglass Retailer Warby Parker Valued at $1.2 Billion." WSJ                     Tech. Wall Street Journal, 30 Apr. 2015. Web. 04 Mar. 2016.

6.     Martin, Roger L., and Sally Osberg. "Social Entrepreneurship: The Case for Definition                (SSIR)." Social Entrepreneurship: The Case for Definition. Stanford Social                Innovation Review, 1 Apr. 2007. Web. 05 Mar. 2016.

7.     "Our History." History | Warby Parker. Warby Parker, n.d. Web. 04 Mar. 2016.

8.     Roberts, Daniel. "Warby Parker Gets Its Unicorn Horn." Fortune Warby Parker Gets Its

Unicorn Horn Comments. Fortune, 30 Apr. 2015. Web. 05 Mar. 2016.

9.     Robiscon, Noah. "The Vision Thing: Warby Parker's David Gilboa Disrupted An                                    Industry And Improved The World's Sight." Fast Company. Fast Company, 01                       Dec. 2011. Web. 05 Mar. 2016.

10.  Slaper, Timothy F., and Tanya J. Hall. "The Triple Bottom Line: What Is It and How                 Does It Work?" The Triple Bottom Line: What Is It and How Does It                          Work? Indiana Business Review, 1 Apr. 2011. Web. 02 Mar. 2016.

11.  "Triple Bottom Line." The Economist. The Economist Newspaper, 17 Nov. 2009. Web.             02 Mar. 2016.

12.  Warby Parker." Warby Parker | B Corporation. BCorporation.net, 2015. Web. 03 Mar.              2016.

13.  Weisul, Kimberly. "How Warby Parker Took the Risk Out of Its Business." Inc.com.                 Inc, 28 May 2015. Web. 03 Mar. 2016.

14.  "What Is a Social Enterprise?" - Learn about Your Enterprise. Social Enterprise Canada,              n.d. Web. 02 Mar. 2016.

---

[1] Warby Parkers Founders are: David Gilboa, Neil Blumenthal, Andrew Hunt and Jeffrey Raider.