3 More Questions (Neil Blumenthal and Dave Gilboa) with David Novak and Koula Callahan

Summary

Podcast Summary

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Episode Overview

Podcast: How Leaders Lead with David Novak
Episode: 3 More Questions (Neil Blumenthal and Dave Gilboa) with David Novak and Koula Callahan
Date: April 8, 2024
Theme:
David Novak and Koula Callahan reflect on a previous episode featuring Neil Blumenthal and Dave Gilboa, the co-CEOs of Warby Parker. They dive into three leadership questions based on that conversation, focusing on organizational culture, pricing strategy, and innovation, sharing actionable leadership insights informed by both their guests’ experiences and David’s own career.

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Key Discussion Points & Insights

1. Co-CEO Model & Company Culture

• David and Koula highlight Warby Parker’s unique co-CEO leadership structure, emphasizing the lack of ego, humility, and communication between Neil and Dave as crucial to their success.
  • “They don't put their ego into the business...they really communicate to each other all the time, and they trust each other. All they want to do is make Warby Parker better.”
    — David Novak [00:52]
• The hosts note how this strong partnership cascades through the organization and sets a tone for collaboration and growth.

2. Eliminating Silos & Bureaucracy (Q1)

• Question: How can leaders eliminate silos and bureaucracies so that the right information gets to each department quickly?
• David emphasizes collaboration as a core organizational value:
  • “The great companies today really make collaboration a behavior that they want to drive throughout their organization...If you want to be a leader, you've got to share information. You've got to be a know how builder.”
    — David Novak [02:22]
• Practical approaches from David:
  • Leaders should openly champion and reinforce the importance of information sharing.
  • Recognize and reward employees who exhibit collaborative behavior (“recognize the heck out of it” – [03:46]).
  • Implement bonus structures that reward knowledge sharing, citing his experience at Yum! Brands.
  • Communicate why information sharing matters, tying it to real business impact (speed to market, customer value, competitive advantage).
  • Declaring “war on bureaucracy” by reducing unnecessary complexity and siloed behavior:
    “I would literally go bonkers and say, hey, we just don't want to do that...you just gotta declare war on bureaucracy and wipe out not invented here. Those are key things that I think every great company always tries to do.”
    — David Novak [06:05]
• Koula expresses newfound motivation to tackle bureaucracy, echoing that these actionable steps are energizing and necessary ([05:56]).

3. Pricing Strategy & Value Proposition (Q2)

• Question: What advice can you give leaders about how to price their products competitively?
• Referring back to Warby Parker’s journey – originally aiming for $45 frames, then pivoting to $95 after advice that a low price might signal lower quality.
• David’s advice for leaders:
  • Understand and constantly reassess your value proposition.
  • Be aware of how your pricing compares with competitors; you must justify premiums with added value.
  • Cites retail and consumer packaged goods examples (Target vs. Walmart, Taco Bell): “You can’t put your head in the sand on your value proposition. If your pricing is out of whack versus your competition versus the value you provide, there's no way you're ever going to be able to be successful.”
    — David Novak [08:41]
  • Providing exceptional value is critical for brand growth and customer loyalty.
• Real-world lens: Taco Bell’s success attributed to perceived customer value (“how little they pay for how much they get”) ([09:18]).

4. Innovation & Staying True to the Brand (Q3)

• Question: How should leaders approach innovation while remaining aligned with their core brand?
• Praise for Neil and Dave at Warby Parker for expanding into adjacent categories (contacts, telemedicine) that build directly on their core strengths.
  • “They've really looked for adjacent categories...allow them to really grow the business. I think when you really get off track is when you get outside of your lane.”
    — David Novak [10:15]
• David’s guidance:
  • Identify areas where your existing expertise and customer understanding give you a credible advantage.
  • Ensure new ventures or innovations make sense for your brand and customer experience.
  • Koula builds on this, noting Warby Parker’s focus on creating a seamless customer journey (prescription exam, glasses, contact lenses) as a sign of smart, customer-centric innovation ([11:03]).
• “The more they understand their customers and the problems of their customers, the more that takes them into new areas of innovation and new business segments.”
  — David Novak [11:27]

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Notable Quotes & Memorable Moments

• “You just got to declare war on bureaucracy and wipe out 'not invented here.' Those are key things that I think every great company always tries to do.”
  — David Novak [06:41]

• “You can’t put your head in the sand on your value proposition. If your pricing is out of whack versus your competition versus the value you provide, there's no way you're ever going to be able to be successful.”
  — David Novak [08:41]

• “They’ve really looked for adjacent categories...I think when you really get off track is when you get outside of your lane, so much so that you don’t have real expertise to bring a lot of value to it.”
  — David Novak [10:15]

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Timestamps for Important Segments

• 00:52: The secret to the co-CEO model at Warby Parker: humility, trust, and communication
• 02:11 – 04:44: Breaking down barriers: eliminating silos and bureaucracy, rewarding collaboration
• 06:41: Declaring war on complexity and bureaucracy
• 07:22 – 09:38: Value proposition and pricing: stories from Target, Walmart, and Taco Bell
• 10:06 – 11:50: Innovating in “adjacent categories” and enhancing customer experience

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Episode Tone and Takeaways

Lively, practical, and candid. David Novak’s anecdotes and Koula Callahan’s curiosity give the episode an enthusiastic, solutions-oriented tone. Key leadership lessons are down-to-earth, with a focus on humility, collaboration, keeping the customer at the center, and fearless pursuit of innovation—always anchored in the brand’s core strengths.

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Transcript

[Kula Callahan]

Welcome to How Leaders Lead. I'm Kula Callahan, here to bring you another edition of Three More Questions with David Novak. It's great to be back with you, David.

[David Novak]

It sure is fun to be with you, Kula. And I'm looking forward to this debriefing of my conversation I had with Neil Blumenthal and Dave Gilboa. They're co CEOs of Warby Parker, and I think the glasses I'm wearing right now came from Warby Parker.

[Kula Callahan]

Well, they look great on you, David.

[David Novak]

Well, thank you. Cool.

[Kula Callahan]

I love listening to this conversation. Like you said, they're CO CEOs, and that's a structure. You really don't find that often in companies as big as Warby Parker. If you haven't listened to their episode and how they make that partnership work as co CEOs, I highly recommend going back and listening to the episode. It'll certainly inspire you to lead your team.

[David Novak]

You know, Kula, one of the things that I really understood after talking to these two guys is why they've made the co CEO work. You know, because they don't put their ego into the business. They're. They're very humble. They understand each other's strengths. They really communicate to each other all the time, and they trust each other. And, you know, all they want to do is make Warby Parker better. And, you know, I think that that organization and their culture has got to feel their bond, and I think that that is cascaded up and down their organization, and I only see very powerful things for them in the future because of their mindset and their focus on growth.

[Kula Callahan]

Absolutely, David. And that's a great tee up for our first question of today's episode. So let's get going with it.

[David Novak]

All right, Fire away.

[Kula Callahan]

Question number one. Neil and Dave believe that part of their competitive advantage is that their data and information flows quickly across their entire company. Their they believe that if you want to scale a growth company, information just has to travel fast. David, how can leaders eliminate silos and bureaucracies so that the right information gets to each department in a way that's really fast?

[David Novak]

You know, Kula, as you ask that question, it reminds me of a podcast we did with Jeff Colvin, and he's the senior editor at large for Fortune magazine, and he wrote a book called Humans Are Underrated. And one of the things that he's trying to make the point on is that, hey, look, you know, in this age of AI, in this age of computerization, humans can do things that a computer will never do. One of the things he talks about is humans have empathy. The other thing he talks about is just the ability to collaborate. And the great companies today really make collaboration a behavior that they want to drive throughout their organization. And that's what Neil and Dave are doing. You know, that's why they're focused on eliminating the silos and the bureaucracy. And they want their people working together, collaborating, sharing information and getting the best ideas. So they make that really a strong value in their company and they shout it from the rooftops. And I think that's the first thing you have to do as leaders. You have to say, this is what it takes to be successful in this company. If you want to be a leader, you've got to share information. You've got to be a know how builder. And once you learn something, you got to do everything you can not to hoard it so that you know something that someone else doesn't know you, but you want to make sure that everyone in the organization knows it so they can take advantage of that learning. So, you know, I think as a leader, you've got to drive that as a part of your culture. And when you see it, then recognize the heck out of it. When you see somebody, you know, really sharing information, getting outside of their silo, breaking down bureaucracy, recognize people for doing that. And then that behavior will happen more, more and more often. The other thing you can do is you can actually put your bonus structure around it. When I was at Yum Brands, we basically paid an extra bonus kicker to the division and to the leaders who did the best job of sharing information and sharing the know how that they would develop. And I think that that is a way to get people's attention. I don't think it's required, but it also shows people what's, what's really valued. And then once we decided which division or which person really got that extra bonus because of, of their ability to share and collaborate, we told everybody about it and you know, guess what? You know, they said, hey, I'd like to be that person next year. And so it builds and feeds off itself. And those are just a few suggestions.

[Kula Callahan]

Well, David, like Neil and Dave said, if you really believe that this is what sets your company apart, then you really have to recognize people for what they do because that, like you said, reiterates the behavior in others and keeps you at the front of that competitor set.

[David Novak]

One other thing, Kula, as I think about it, you know, you gotta let people know why it's important in your business. You know, like at Yum. Brands, for example, we were in well over a hundred countries. We're learning everywhere. You know, we. We were getting knowledge about our customers everywhere. We were innovating everywhere. And that's a big competitive advantage because we're not just in one place. We're all over. And we've got these great teams with great minds and great thoughts. Man, if we can get everybody sharing that information, just think we get a huge competitive advantage. We can get to market faster, and that's. Speed is very important. And we can get to market with the things that really will make the biggest difference for our customers, which is always the most important thing that you can do. So, you know, you gotta believe deep down that getting rid of bureaucracy and getting rid of all the silos is really gonna work for you. And I know we certainly believe that.

[Kula Callahan]

I never thought I would be this fired up about getting rid of bureaucracies and silos, but that answer really got me amped to do that even in our own organization.

[David Novak]

Well, bureaucracy is pretty boring, but you gotta hate that. You gotta hate bureaucracy. I mean, when I would see us doing stuff that we shouldn't be doing and that was just adding more complexity to something, I would literally go bonkers and say, hey, we just don't want to do that. I remember, for example, when I first went to kfc, we had more measures than Coxis has pills. We must had. We were measuring everything and people were walking around with these books measuring everything. We broke it down to the vital few because all we were doing was creating bureaucracy for people to have to manage. And, you know, you just gotta declare war on bureaucracy and wipe out not invented here. Those are key things that I think every great company always tries to do.

[Kula Callahan]

Question number two. At the very beginning of Warby Parker, Neil and Dave knew that they wanted their price to be accessible for their customers. They'd originally wanted to price their glasses at $45 a frame, but after a professor at Wharton told them that no one would believe their product was any good if it were priced that low, they increase the price of those frames to $95, and you can actually still get a pair of Warby Parker glasses for just $95. David, what advice can you give leaders about how to price their products competitively?

[David Novak]

Well, first of all, you got to know that it's critically important that your value proposition is right. You know, you can't ignore your pricing. You got to know how, how your pricing stacks up against your customers. And if you're premium price, are you really adding value that justifies that premium. You know, I'll never forget a conversation I had with Bob Ulrich, who used to be on the Yum board of directors and he was a CEO of Target. And one time he was talking to Roger Enrico, who used to run PepsiCo, and he said, you know, Target is fundamentally competitive with Walmart. Roger Enrico says, what do you mean fundamentally competitive? He says, well, we're in the ball game. What do you mean you're in the ball game? I mean, if I buy a box of Tide at Target and a box of Tide at Walmart, do I have to pay a premium at Target? Well, you probably do. Well, is that box of Tide that much better a Target than Walmart? Probably not. And so what. What Bob Ulrich then realized is they had to get their cost structure more in order so they could go toe to toe with Walmart on the pricing front because their value proposition wasn't such. That was providing that much more added value where you should really charge a premium price at Target. And you know, that was something that he really had to get his organization to really understand that you got to be competitive against Walmart. Now, one thing I really want to emphasize, you can't put your head in the sand on your value proposition. If your pricing is out of whack versus your competition versus the value provide, there's no way that you're ever going to be able to be successful. And by the way, one of the keys to Taco Bell's great success is that the pricing that they have on their products just blows away the category in terms of value. It's. And when you can do that, then you're going to have dramatic growth. And you know, one thing that people are always amazed about when they go to Taco Bell is how little they pay for how much they get. And that is a wonderful formula for success.

[Kula Callahan]

Question number three. In the episode, Neil and Dave talk about the growth plans they have for Warby Parker. They talk about how they've launched a contact lens business and are investing in telemedicine along with several other efforts within Warby Parker. You mentioned in the episode that it's kind of like they're serial entrepreneurs within their own business, always looking for ways to innovate and expand. Where should leaders look when they're trying to innovate while also staying true to their core brand and product?

[David Novak]

Well, I think what Warby Parker's done and what Neil and Dave have done is they've really looked for adjacent categories, you know, categories that are very close in to what they do, but bring in a different business, a different segment, and allow them to really grow the business. I think when you really get off track is when you get outside of your lane, so much so that you don't have any real expertise to bring a lot of value to it. So I think the biggest thing you can do is ask yourself, hey, how do we grow what we already have? What expertise do we have that will allow us to go into other categories with credibility? And then what makes us think that we can win over the long term in that specific category? And if I think you asked yourself those questions, you got a good start to begin to figure it out.

[Kula Callahan]

You know, what they've really thought about as they've made these plans for expansion and innovation is making the customer experience one that is seamless. So if a customer goes to Warby Parker, gets an eye exam to figure out what their prescription is and then buys eyeglasses, but then also wants contact lenses, they don't want their customer to have to go elsewhere to get those contact lenses. So I think also positioning your growth opportunities around what makes a better customer experience is a good way to think about it as well.

[David Novak]

And all those examples that you talk about is right in their lane. It's what they should be experts at. And the more they understand their customers and the problems of their customers, the more that takes them into new areas of innovation and new business segments. Great case study.

[Kula Callahan]

Well, that does it for our episode of three more questions for today. Thank you so much for tuning in to how leaders lead. We're on a mission to make the world a better place by developing better leaders. And if you carve out a little time with us each and every week, we'll help you build the confidence you need to lead well.

[David Novak]

And coming up next on HAL Leaders Lead is Jon Rahm, professional golfer, and the defending Masters champion, Sam.