October 13, 2021 • 44 mins
Sunglasses are enormously popular these days, and even prescription spectacles have evolved into fashion accessories -- people routinely spend hundreds of dollars in efforts to either look cool, be able to see, or both. So what happens when a single company controls the market? This is the accusation critics levy against manufacturing giant EssilorLuxottica. Today's question: how much of this is true?
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Episode Transcript
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Speaker 1 (00:00):
From UFOs to psychic powers and government conspiracies. History is
riddled with unexplained events. You can turn back now or
learn the stuff they don't want you to know. A
production of I Heart Radio. Hello, welcome back to the show.
(00:25):
My name is Matt, my name is Noel. They called
me Ben. We're joined as always with our super producer
Paul Mission controlled decade. Most importantly, you are you. You
are here, and that makes this the stuff they don't
want you to know. You guys, I am so very excited.
I've wanted to do this episode. I think we all
have for a number of years. First things First, fellow
(00:48):
conspiracy realists, if you're watching this video on YouTube, you
might notice that a writer or die Matt Frederick is
rocking some cool specs. We're all fans of cool sunglasses.
Until very recently, I was wearing glasses on the daily. Um,
I'm terrified of the sun, as you know. You guys
(01:08):
know that. Yeah, so I can't I can't go. I
can't go with the day Walkers unless I have some
sunglasses on. And I was looking some stats. It's crazy
because if you ask people in the US if they
own a pair of glasses, just glasses in general, prescription whatever,
whether we're talking about really nifty product or RayBan sunglasses,
(01:32):
or whether we're talking you know, bifocal lenses you would
get at lens Crafter. Is the answer from those people
is probably gonna be yes of women in the U
S where sunglasses as of dudes do the same, and
prescription sunglasses are also on the rise. It's just it's
(01:52):
a big, big, big, big business. But according to the critics,
and as everybody knows if you listen to our recent
conversations on Strange News, according to the critics, there's something
wrong with this industry, something deeply wrong, and you'll hear it. Yeah,
and you know, there's also something wrong with my classes
(02:14):
because I'm wearing contacts right now and these are corrective lenses,
and I'm getting a headache. So I'm gonna take giving vision. Well,
but you need those glasses or those contacts. That's something
we'll get into too, because look, the critics are saying
that you can go into a Pearl Vision, you can
go into a lens Grafters sunglass hut, you can go
(02:35):
wherever the heck you want, and you can buy whatever
kind of glasses or frames you want very expensive ones
to bottom of the barrel, and those brands and those
different prices don't actually matter, because, according to the critics,
you are ultimately buying your spectacles from one very very
powerful company, Luxotica, and how it's usually known and they've
(02:59):
got a different official name now, but we're finally doing it.
You guys, how ridiculous will it be if this is
the episode after these many years that sinks our show
because Lexata is seriously like super powerful. They're like the
Illuminati of spectacles. Here are the facts. Yeah, I mean
their name even sounds kind of like Illuminati. Um, yeah,
(03:20):
it's true. I mean, so the founder of Luxotica is
a dude name Leonardo del Vecchio. He can't have a
name like that unless you're like the eyeglasses mogul um.
But he established Luxotica at a gordo in the Belluno Dolomites,
which as a region of Italy. Uh. And the name
(03:41):
is derived it's like a cool portmanteau combination of the
Italian words for light and optics loose and ottica. You might,
you know, like the there's like a Roman phrase lux
e turna that means like the eternal light of God.
That's what I always think of. And they call this
a deck. This a perfect marriage. Also, I didn't, uh,
(04:04):
I mean to over emphasize this in the notes. If
you saw the notes we have here, this is that
line is in all caps. Sorry, guys, it's it's not
that porto. It's just being lazy. But but that is
that is a really cool name. And in its early
years this company wasn't a huge, huge player. They made
(04:25):
accessories for the optical industry, they manufactured components, they didn't
make their own glasses entire and del Vecchio saw some
opportunity here, and maybe it was a little bit irritated
because he might have felt he was leaving some money
on the table. He had originally started his career as
(04:45):
a metal worker, but when he moved from Milan to
a Gordo, he wanted to get into eyewear. And he thought,
you know, I've been doing this for a few years.
I can make parts for spectacles all the livelong day.
But what if, he wondered, I could sell my own
complete frames. And he did that in nineteen sixty seven
(05:08):
with the first Lexotica collection, and people loved it. People
were on board with it. Still wasn't enough. Let's fast
forward to seventy four. Yeah, at that point he's like, Okay,
we've made the metal to make the stuff. Now we're
making the whole frames to make the thing. And then
he's like, well, what if we could do more than
just frames? And he thought, well, how do I get
all of these things lined up vertically for my own
(05:32):
for my own wealth? And again like this is, in
my opinion, this is great. This is somebody who's thinking
really big, right, this is uh. I don't know the
backbone of industry, of capitalism when it's when it's workings
figuring out how to do it, so uh, but he
the whole idea is he wants to vertically integrate as
much of the the glasses, business, frames and all as
(05:55):
he possibly can. And the interesting thing too is, like
I mean, del Vecchio like his background was in materials,
like he was a metal worker. He was basically like
I think, an apprentice and never really went to college
or definitely never completed college. But everything that he learned
he did so kind of by the sweat of his brow.
And the bigger picture of lexotica that we're already just
(06:15):
starting to dip our toes in the notion of like
taking those materials, making it all about the supply chain
and the materials and kind of leaving it to others
to do the design work. Though he was into that too, um,
but he's sort of setting the groundwork for this master
plan that we're getting into. Yeah, yeah, very much so.
And vertical integration is a kind of unsexy term for
(06:38):
an amazing, impressive and at times dangerous practice, a dangerous strategy.
I was thinking of different examples. So, like, imagine we
get together and we make potato chips, conspiracy chips, whatever
you want to call them, and we're doing all right.
You know, we got four or five flavors. People are
into them, but we want to go bigger. So if
(07:00):
we were vertically integrating, we would also start maybe owning
stores that sold the chips. Maybe we would start owning
the potato fields. Right, we would start bringing everything in,
as you said, Matt, under one figurative roof. And this
has a lot of advantages for the people who are
able to pull it off. So by the seventies, del
(07:22):
Vecchio is selling luxotica glasses directly to customers, and he
ends up like you are alluding to know. He ends
up buying a distribution company, and this sets off this
period of hectic acquisitions and partnerships throughout the nineteen eighties.
The company expands, it blows up, really, it explodes internationally,
(07:43):
and then something interesting happens in the world of fashion.
As you know, I'm not a person very well acquainted
with fashion, but in the in around the nineteen eighties,
a lot of people started saying, you know what, classes
aren't just helping me see better. Glasses can be a
fashion statement. And now you know, now we live in
(08:04):
a world where some people wear glasses just because they
like the look. There's not a corrective lens. They're just like,
I'm hot stuff with these Warby partners. I call those
glasses pretenders, Like I'm all about a good sunglass, but
I don't. I think if you don't need the lenses,
it's not cool to like be a be a fake
glasses where during daylight hours, Hey, come on, now, don't
(08:25):
throw it too much. Shay, I've I've I got those
blue shift lenses or the ones that aren't corrective. But
blossers are great and they look I like, I like
the way they look. At least something functional that's at
least doing something functional. Isn't that supposed to like make
you like less depressed or something like like eye strain?
(08:45):
I think yeah, But but it's it's true. Regardless of
how I mean personally feel about it, glasses started becoming
something more than a medical device. They became a fashion statement.
And Lexotica was very much in the in on the
ground floor of this shift in attitude. They were arguably
(09:06):
in on the ground floor because you know, they owned
the ground by this point. But they partnered with our money,
which is like, that's a big deal. Our money is
known for being kind of expensive. Well, let's also consider,
like I mean, you know, in pop culture, like wearing
glasses was a sign of considered like a sign of
weakness or a sign of being some sort of like
(09:27):
nerd uh. You know, Clark Kent has to take off
his glasses to become cool, and when he puts them on,
nobody notices them because he's you know, a glasses wearing outcasts.
That's true in film and TV and all that stuff
in comic books. But because of Lexotica and this relationship
with our money and more, you know, moves that they
would go on to make they kind of essentially almost
(09:49):
single handedly made glasses cool and and like a fashion
accessory rather than you know, the mark of of someone
that was like, you know, less than It's weird how
public opinion can shift so easily. You have the right person,
the right influencer rocking glasses and millions of people can
change their mind or change their attitudes about them. Uh
(10:11):
Looxotic a new This was a huge opportunity, and they
started making partnerships with pretty much every design house that
you could easily think of. And then there's another big shift.
So we're kind of, um, we're giving you the high
points of a very complex story with a lot of steps.
But if you're telling this story of Lexotica, when you
(10:35):
talk about Lexotica today, you're probably referring to something that
happened in October of eighteen, which I think all three
of us would like to talk a little bit about.
From the legal side, Lexotica had a merger and they
created a new powerful holding company the name of Lexotica
now where there it's holding company is or Lexotica all
(10:57):
one word. When this thing happen, it created what's called
market capitalization of around seventy billion dollars. Not bad for
a hometown guy from Milan, you know what I mean.
Like today today, this guy del Vecchio is worth an
estimated thirty one point one billion dollars, just as as himself,
(11:21):
not as his company. So like this merger though, it
had a lot of people worried, didn't. I mean we
all watched this war story talk with one of the
lawyers involved. Yeah, I just will jump in really quickly.
So s Lore was a free standing French company and
they specialized in manufacturing lenses. Okay, and when you've got
the frame manufacturer in Luxonica going hey, let's get let's
(11:46):
merge with this lens manufacturer specialist and create one giant thing,
you could imagine that this was um a bit worrisome
for people who are looking looking for that big m
somewhere in there, well monopoly action, just to see what
could happen. Yeah, but the merger was weirdly like not
that contested if i'm if I'm yeah, because there's that
(12:10):
there's that point where they said these are not things
people have to have, like rebands are very popular, sunglasses,
but they the authorities what who knows what the back
room situation was like. But the authorities officially concluded after
long conversations that ray bands and a lot of sunglasses were,
(12:34):
in fact, what they call it, they were not must
have must have items. Yeah, and I mean, you know,
and that's that's certainly true. That they're more of a
status symbol in many ways, and they are like a necessity.
You can buy a pair of twenty dollar you know
gas stations sun much, which ironically ray bands used to be.
There was a period where like ray Bands as a
freestanding company were like failing after you know, getting a
(12:56):
bunch of hype because of Tom Cruise wearing them in
risky business, and I believe also in Top Gun where
he had more of this the mirrored shades. Um they
kind of took a dive and we're struggling, and there
was a period in the late nineties. Or you could
buy a pair of ray Bands at like a drug
store for you know, Bucks and Lexotico and they you know,
bought that brand or whether I'm not quite sure exactly
(13:18):
the relationship because they have various arrangements, but they turned
it around and made it into one of the most
recognizable you know, luxury quote unquote you know glasses brands
in the world and made it, made it, made it
like a status kind of thing or like a symbol
of like, hey, I can afford to spend hundred and
fifty minimum hundred and fifty dollars on a piece of
(13:41):
plastic that I put on my face. But the thing
is it's not just ray band, right, Nope, And there's
a lot of stuff people get wrong about it. Uh,
they can. There's this status I want to bust later
on in the show today. Uh, and folks familiar with
the story, you can probably yes, what that statistic will be.
(14:02):
But you're absolutely right, Matt. We can. We can laundry
lists them, but we're not gonna launchry list them all
because the show would just be us doing that for
like easily thirty minutes. That's how deep this goes. The
company still make sunglasses, they still make prescription frames, and
if you talk to them, they're two big like buckets
(14:24):
are retailed distribution selling sunglasses, frames, lenses, and stores, and
then the other one is manufacturing or wholesale distribution. So
they're not selling directly to consumers in that point, but
stores that they own, all the damn stores they own. Yeah,
let's because they own some brands like you. You might
(14:47):
you might think, I can't wait to buy my Vogue glasses.
But do I choose between the Vogue or do I
choose between the Oakley? The same company makes those. Again,
these glasses are seen as a fashions statement, and they're
they're supposed to have certain connotations, right because whenever you're
buying something that has a brand, you are buying an
(15:08):
idea more so than a physical product. And that's just basic.
That's day one stuff baby in the world of advertising.
But they also they don't just own a bunch of stuff.
They also make these licensing deals or these partnerships with
names that are familiar to anybody in the world. Chanel, Coach, Brooks, Brothers, Polo, Ralph,
(15:31):
Laura and product of Versace, you name it. They're they're involved.
They got a hand in the pie legacy companies like Tiffany,
you know, I mean and and that that relationship involves,
you know, those companies basically licensing out their designs to Luxotica,
who then get to slap the you know, adults and
Gabbana little logo on the side and therefore they cost
(15:54):
a thousand dollars. But they are not made of magic,
you know, I mean they're they're made of this materials
and everything else is and don't cost near that to manufacture.
I mean, it's it's like insane markup on the especially
the luxury kind of licensed ones. You guys forgot Michael
cores and just want to point out, according to Marshall's
this shirt is Michael Coerce. Oh yes, sorry, sorry, Mike
(16:18):
respects credit where its due. These these things are all true.
And if you travel around the world, you might not
know that there's a Luxotica operation you're you, but there
probably is. There thousands, thousands of retail locations and multiple countries,
the US, North, South America, China, South Africa, the United Kingdom,
(16:41):
the United Arab Emirates, etcetera, etcetera. But if you walk
into an eyeglass store sunglass store in these areas, you
might not know you're walking into a Luxotica store. You
might think, should I go to Sunglass Hut or should
I go to Apex by Sunglass Hut, Or should I
go to Spectacle or should I go to Lens Crafters
(17:02):
or maybe Pearl Vision huh Target Optical. Yeah, I've been
there and targets have a lot of lenses that you
can buy or O P. S M or or a
Lori or hey, what about you know, getting my vision
care covered? These frames are expensive, these prescriptions are expensive.
Uh maybe I'll use imed vision care. That seems legit
(17:22):
and unrelated to any of these other things. Wait, I'm
on their website now, and oh why is target optical
list and sunglass hut vision lenscrafters Wait a minute, OSM
one sunglass understand the darkness behind them? Yes, it's true.
(17:46):
It's all true, folks. They're not different. Fingers on a hand,
that is what we're talking about, fingers on a hidden hand.
And for some people that's well and good, that's hunky dory.
For other people, that's a huge problem. Because Exotica Argue
has become more than just the big boy in the room.
It has become a monopoly, and therefore it has become dangerous.
(18:08):
So we're gonna pause for word from our sponsor, and
we're gonna return, separate some fact from fiction and figure
out just how much of this, if any, is true.
Here's where it gets crazy. Uh, finally to the statistic
All right, Matt Nol, You know you guys, and I
(18:30):
talked about this off off air. That's something that gets
thrown around all the time. You'll hear different versions of it,
but it's usually something like, you know, Exonica controls the
entire sunglass industry. Something must be done. I don't know.
That voice is vaguely related to macho man Randy Savage. Um,
you know, I guess got into optometry or whatever. But
(18:52):
he always were he always were locally type shades you
see in his eyes, So snap into a monopoly. What's
up with the statistic? Well, it makes for great headlines,
that's inarguable, but it probably isn't accurate. And I dug
in a little and I think I've figured out part
(19:15):
of the discrepancy. I want to see what you guys
think about this. So if you go to the company itself,
they'll be like, yeah, we're doing pretty well. We're pretty
we're pretty proud of ourselves, but we don't sell eighty
percent of all the glasses in the world. They'll tell
you that their frames, just the frames are probably maybe
ten percent of sales worldwide, and in the US that
(19:38):
number bumps up to about so one in five frames.
Just in general, frames that you buy in the US,
one in five of those is probably made by Lexotica
in some capacity. But Snopes broke this down a little bit,
and we need to learn the history of this statistic
and how I think how the wires got crossed. This
(19:59):
is not meant to defend Lexotica, just to be clear,
We're just trying to be accurate here. There's an episode
of a show called Adam Ruins Everything, and it's Adam
Ruins Everything. I think is a solid show. And in
this show they talk about In this episode, they talk
about Lexotica, and one of their sources is a blog
from Forbes written and that blog cites this statistic and
(20:24):
it refers to another source of Forbes article from two
thousand twelve. Here's why I think happened. If you look
at that two thousand twelve article by Dean Crutchfield, you'll
see the claim that more than eighty percent of major
eyewear brands are designed and retailed or sold by Lexotica.
(20:45):
That's not the same thing as of all glasses ever ever. Ever,
it's more like it's it would be like if you
had a shoe company and you controlled eighty percent of
sneaker brands that's not the same thing as eight percent
of all shoes. Does that make sense? That does make sense.
And I will say too, I watched a sixty minutes
(21:06):
UM episode. It was called Sticker Shock, and it was
all about like it was there kind of deep dive.
This is before Lexotica was a much of a still
not really a household name, let's come of the point.
But it was really like it felt like investigative journalism
at the time because it was sort of like almost
this shadowy company, UM. And the headline was why do
designer glasses cost more than an iPad? Uh, the eyewear
(21:27):
company with total domination setting astronomical prices. We're gonna get
to that a second. But at the time, the CEO
is interviewed by Leslie Stall says that he she asked
some point blank, how many people do you think are
wearing glasses that are you know, in some way touched
by Alexotica, And he just said something in the neighborh
he said billions, billions. So whether or not it's eight
(21:50):
percent of the overall market share, I mean billions of people.
You know, by the admission of the CEO, who's probably
a job, is that the soft pedal. These ice the
ideas of monopoly. Uh, that's kind insane and definitely show
some serious domination of that space. Oh yeah, and there's
not really am The thing that's fascinating is there's not
(22:12):
a ton ton of information out there. There's not a
lot of you could say, visibility on some of the
ins and outs of how these how the money moves
in this situation. And that's always something that you want
to look out for when you're trying to figure out
if something is a monopoly. There's no mistake Exotica is
(22:33):
indeed a leviathan. It is the largest single player in
its industry. But is it a monopoly? Yeah, of course
it is. It would be. How could it not be.
Exotica doesn't just own eyewear brands and frames. They don't
just own distribution, They own insurance services. They have made
(22:54):
these strategic partnerships and acquisitions that give them a significant
a significant amount of leverage on the price of a
pair of glasses. They can kind of decide how the
market moves. And there are plenty of people who will say, well,
what's wrong with that? And there are plenty of people
say that is food bar a lot of industry veterans
(23:17):
have have a complex relationship with Lexotica. There's one guy
who found quote in l A Times, Charles dahan Uh.
He used to be the main dude supplying frames to
the company Lens Crafters, before they were acquired by you
guessed at Lexotica, and he says there's no real competition
(23:39):
in the entirety of the industry anymore. He thinks Lexotica
is a quote from him. They bought everyone and they
set whatever prices they please, and those markups can be
incredibly high, as anybody's ever purchased glasses can attest. Like
the when we're talking about a markup a profit margin,
the numbers might surprise you. Yeah, there is a pretty
(24:01):
great article from The Guardian, if I'm not mistaken, where
some former lens Crafter high level execs we're talking about
the markup being like bordering on a thousand percent. Well, yeah,
I mean think about it. Look look at these Look
at these things. How much did these cost there? I mean,
I get it, you're molding some pieces of metal and
(24:22):
some plastics and the lenses aren't you know, simple to produce?
But should this be like three That's what they charge
people in these like lens crafters, like stores, especially when
you're getting your eyes checked and everything. These are these
are some of the cheapest glasses I could find, and
even with eye insurance, I had to pay a lot
(24:43):
of money for these. And it's like, I just I
don't get it as a consumer. Just just really quickly.
The CEO Andrea Guerrera in that sixty minutes piece, I
mentioned his defense of that as well. This is an
item that you have to wear on your face all
the time. It's the perfect crystallization form and function, and
that's not easy to do. That's that's that's what he
(25:04):
has to say. Yeah, because there is a lot of
research that goes into this, right. Uh. There there are
people who disagree with that estimation, folks like a journalist
named David Lazarus who was writing for the l A Times.
He didn't really mince words when he called prescription I
wear quote perhaps the biggest single mass market consumer rip
(25:26):
off in the world. Yeah, I know, right, and oil
companies are still a thing, but whatever. In he broke
down the math and he verified that the average cost
of a pair of frames not lens his mind, to
just the frames was about two and thirty one dollars,
and that was according to VSP. The SP is the
(25:47):
biggest provider of um I I care I insurance benefits.
So if you look at the average costs of a
pair of just single lenses, that's a hundred and twelve dollars,
and those are the simple lenses. If you need some
bells and whistles, then the price can double. So if
we just take the base value there two one plus
(26:10):
a hundred and twelve, then what we see is that
three hundred and forty three dollars tens would be the
average that people would pay all told, not counting an
eye exam. I think that's exactly what what these costs.
And these are made by I'll tear, another company, not Luxotica.
All tear is associated with VSP, like directly associated with VSP. Yeah,
(26:36):
what the heck are we being had the question? Uh? Yeah,
And of course people also pay a premium for designer brands.
Again many many of these brands are owned by Luxotica
or Lexotica as a hand in their production. So naturally
this causes people to say, what am I paying for?
If so many of these glasses are made in the
(26:57):
same place. Is the difference, just like a logo stamped
on the side, Are the pricey posh glasses essentially the
same as the stuff at the lower end, And it's
it's a it's a good question. But to be clear,
you know they have different designs and things like that. Uh.
Supporters of this system say, look, these costs are justified.
(27:18):
You're not just buying a pair of glasses. You're you're
buying the association with the brand. You're buying the designers work,
you're buying the research that goes into making new frames,
better lighter lenses, and ongoing innovations. But to a lot
of critics, this one company, as David Lazarus put it
in his articles, is getting away with fleecing people for decades.
(27:41):
And you know who agrees. The guy who founded lens Crafters.
What yeah, he's he's an interview and he's like, oh yeah,
this this markup is real. His name's E. Dean Butler.
He says, you can get amazingly good frames for four
dollars to eight dollars, and then for fifteen dollars. He says,
(28:02):
you can get designer quality frames, mad stuff, you get
it product And yeah, this is real. This is real, Uh,
but it still doesn't have It's not product though. You know,
it's all about that stamp. It's all about that like
status symbol, you know what I mean, Like there are
people that really matters to I'm know, how many stamps
(28:23):
you can make for several hundred dollars I can. I
can put product on everything I own a couple. It's
it's the same with like shoe people, you know, like
you know, hype beast type stuff, with like particular brands
of shoe that are crazy amounts of money, or it's
about scarcity. You know, it's a combination of all that stuff.
But you know, it is more about this manufactured idea
(28:47):
that Ben was referring to than it is about the
quality of the actual good. I have plenty of cheap sunglasses,
but I also own a pair of hundred plus dollar
ray bands because it made me feel cool to own
them and me feel like I was in some kind
of club. I'm gonna be completely honest. I know it's
sort of pathetic, but it is what it is, and
people a lot of people feel that way. No, it's
definitely a lot of people do feel that way. It's
(29:10):
a natural human instinct, you know, and I wouldn't drop
one more piece here. Butler also says that when it
comes to lenses, they cost about a dollar a pop.
Two dollars in fifty cents. Those are the lenses. These
all the same components we just described, can be you know,
(29:32):
they can be combined into spectacles or sunglasses, and those
can sell for as much as eight hundred dollars us.
This is this is kind of nuts. Now. Of course,
if it's your money, it's your money, and spend it
as you choose. No one's here to tell you what
to do. But I think it's a good question for
us to ask, which is how much of a role
(29:56):
does Lexotica play and setting these prices? How much should
they play? And why is? Why are those questions important
in the first place, Because right we're talking about just sunglasses,
We're talking about just classes that might not seem important
to a lot of people. But we're gonna pause for
word from our sponsor and we return. We're going to
dive a little bit deeper into why this matters. We've returned, Okay,
(30:25):
so that's the situation. What on earth are we supposed
to do? First? We gotta admit corrective lenses and glasses, right,
they have ascended to the level of fashion, but they're
also still medical devices. They're necessary for billions of people,
and that means it becomes, arguably, I think there's a
(30:47):
solid argument it becomes a medical concern, like part of healthcare,
you know what I mean, Like people people need to
have glasses for more than just looking cool. That's why
I wanted to talk about this so much with you guys,
because that's the only reason I have classes, because I
had to. I couldn't see right. And the first pair
of lenses I got was that a lens Crafters. I
(31:08):
remember it very vividly. Uh it was. It was at
North Point Mall. Oh my god, I'm I can see
the whole thing happening right now. It was not crazy expensive.
I didn't have vision insurance or anything like that, and
it wasn't crazy expensive. I remember the lenses themselves being
really expensive. For some reason. I don't know. Maybe I'm
(31:28):
misremembering that I don't have to right to my parents
or something that was a kid and I've I remember
something like there was such an up cell while I
was in this place that's supposed to be an eye doctor.
But it really felt like a lens distribution like store, right,
I mean, it's what it felt like exactly. It's it's
(31:50):
it feels like it's more of a store that also
has an eye doctor working there, right, Yeah, And that's
that's very common set up, you know. And even if
you don't like glasses, but you have to wear them
and get the eye exam, you're probably gonna look for
the easiest answer. Right, So you've just had your eye exam,
they've got your prescription. Why not knock it all out
(32:11):
while you're here? Why not get the contacts? Why not
get the get the glasses. And even if you can
point to examples of glasses that are more expensive just
because they're fashionable, we can't escape. We cannot escape the
simple fact these are not nifty little sartorial nods for
most people wearing them. They're necessary. You need to see.
(32:32):
And if there's one company raining over an industry that important,
then those folks have no choice but to interact with it.
That's it. There's no other option. And that doesn't like
and maybe it's maybe it's helpful in the long term
for this company to have many guys is for it
to appear as though there are many many more manufacturers
(32:55):
and many many more stores then there are in reality.
But how do you fix it? You know, would you say,
would you say, okay, we need Uncle Sam to step
in and prevent price gouging, right, like, uh, consider the
example of insulin insulin had the price has exploded right recently,
(33:17):
and it really shouldn't, is it? Is it only a
monopoly if it's something that people need, like like like
like like the like the internet, like telecom or whatever,
it's maybe a little easier. The barrier to approving a monopoly,
there's a little easier. I'm just confused, Like this seems
like a straight up monopoly, and yet they were allowed
to have that merger where it's all of the pieces
(33:39):
of the puzzle, you know though, the lenses and the
and the and the frames. But yet they it's sailed
right on through with very little um pushback from regulators.
So I'm just wondering, like, is it because but but
then the medical device, you know, angle of it, especially
the fact that they literally own that insurance Carrey we
talked about i met Vision, which self proclaimed uh the
(34:02):
second largest vision benefits company in the United States, serving
approximately fifty two million members, And who do you think
they cover? Where do you think that the places that
that you go that are like in network are it's
as places I named off at the beginning of the
show that we that we mentioned that they also own.
So how is that not a total conflict? Avenguer, I
(34:23):
shou'nt understand how this is allowed to Yeah, a monopoly
doesn't have to be over necessary good. Uh, it could
be like a not you could have like back in
the day, you might have a monopoly on the fur trade.
People like wearing fur. They're like using it for stuff.
But you're not gonna die or have your quality of
(34:45):
life significantly impacted if you don't have, for right, in
the case of clothing, you just wear something else. So
that the argument there is that again these are not
must have items, these are optional, But that isn't really
the case. It's it's not basically untrue, but it is
a little bit misleading to frame it that way, especially
(35:06):
when you consider how convenient that makes the company's position.
So how would you if you said this was price gouging,
how would you tackle it? You know, would you take
an approach similar to the way regulators have tackled the
pricing on EpiPens, which is definitely must have item for
some people. Uh, if you're a fan of the free market,
if you fall more on that side of political economic philosophy,
(35:30):
you might say, I don't know. I think the government
interference for sunglasses or classes in general, I think that's
a bridge too far. But there's a response to that,
and I think it's a response. It's fair to ask,
didn't a free market paved the way for Luxotica in
the first place. Like their Again, their perspective is, you know,
(35:51):
we're doing very well as a business. That's what we
do and and we're the best at it. But we're
not some kind of evil empire. We're giving They'll say,
we're giving people a ton of options. You know, we're
giving them a ton of choices. Right, Not everybody has
to buy eight hundred dollar glasses. We have other stuff available.
(36:12):
That's their argument. But you can easily see why a
lot of folks would have a problem with that, both
inside and outside the industry. UM. One thing that we
should note is this may not be the situation for
forever or for long, because now there are new competitors
out there, their places like U Zenny. You guys remember
ny people love Zenny because they make stylish looking frames
(36:36):
for an affordable costs. Because I am uh sponsored by them,
No I'm not, but like or like Warby Parker, you know,
they kind of cornered the market on internet only frames.
But the question there is like are they just gonna
We didn't talk about this, but I'd love to bring
it up. Oakley. We we mentioned and I think I'm
maligned somewhat. Sorry any Oakley Wears out there, But Oakley
(36:59):
kind of called them on this stuff as a company.
They called them on this price fixing, you know, Shenanigans.
But what do you think of Exotica? Did they dropped
them from all their stores and then they and then
they bought them over over we sank their stock by
(37:19):
because they again, if you're the only game in town
in terms of retail aside from little niche you know stores,
I mean sunglass Hut, that's kind of where it's at.
It's in every mall you think of, like where do
I go to get sunglasses aside from like some cool
local store that sells all kinds of stuff, or maybe
like you know, boutique type type shops you're gonna say
sunglass Hut or one of those places. So if you're
(37:40):
product is dropped from the one kind of hub for
buying sunglasses, you're screwed. And then once there's once they're
their stock price tanked. Uh, they bought them for like
a deep discount. That's some real I drink your milkshake stuff,
you know what I mean. And it was, it was successful,
it worked. You will you'll see other people criticize Lexotica.
(38:02):
This is not necessarily a hidden thing. It was last
week tonight. I had a piece on it. We mentioned
Adam Ruins everything. There's been a lot of reporting over
the years, but the situation hasn't really changed. That's that's
the thing. People might be more aware of it, but
that's that's not stopping what people would characterize as monopolistic practices.
(38:27):
And this is not a case like the de Beers cartel,
which has to advertise in the US through a number
of other fronts. You know what I mean, Lexotica is here.
They actually just relocated a bunch of jobs to Dallas. Uh.
They've been expanding during the COVID pandemic. They've got they've
got irons, irons in the fire, and it makes me
(38:47):
wonder what the future is out there or what it
should be. Right, should authorities interfere with this? Should they say, hey,
this is we're we're using antitrust laws to break up
this monopoly. Lee. I don't know, because right now, the
at least in the US, the government has been very
very friendly to monopolies. Check out our two part episode
(39:08):
on Lobby. Yeah. Well, and add to that, this year
in March s a lord Looxotica acquired another giant company
called Grand Vision for eight eight and a half billion dollars.
So like they're they're still expanding. It blows my mind
(39:29):
to imagine that they are already that big and they're
just going to continue The blob is going to continue
expanding out yea, yeah, for sure. I mean it does
that surprise you though, I mean, it seems like it's
what they've what you know, from back when our boy
Leonardo was just a wee lad you know, in uh
in Milan. He had a dream and it wasn't to
(39:49):
make handmade artisanal glasses for the people. It was to
be like the octopus that that that that makes glasses
for the the universe. You know, well, you right. But but
but it's a weird situation where for this specific one
in March that they just got antitrust approval for whatever
it is. To to go along with the acquisition, they
(40:10):
have to sell off a bunch of their stores in
Italy and the Netherlands and a couple other places in
order to have more stores under this new brand that
they're purchasing. Um, it's just a strange shuffling in the
end too, I think by for more market share, but
I don't know. I'm not like that attorney who was
being interviewed for that one thing. We watched. Everybody on
(40:32):
this call watched. It's just so nonchalantly talking about how
it's not a monopoly. We like to do what we
want to take away. But yeah, check that out. Just
go to YouTube and search war stories like exotica. I
think that will get you there. Um, it's an interview
with the lawyer who shepherded a lot of that merger.
(40:55):
So that that is where that is where the state
of classes is at. And increasingly people are, oh, forgive
me seeing the situation with more clarity, But that doesn't
necessarily mean anything but change. And there are a lot
of people who think maybe stuff shouldn't change. Maybe that's
(41:16):
just how the spectacle sausage gets made, you know what
I mean? Maybe I know, not a pleasant not a
pleasant image. But we we hope we've been fair at
least to to give you luxotic as perspective as well
as the perspective of other people. But the truth of
the matter is that these things are relatively inexpensive to manufacture,
(41:39):
and they are sold with a very high profit margin.
That's not necessarily illegal, at least as the law stands now.
But then you have to ask yourself one of the
questions we ask ourselves in our episode on Alec not
Baldwin a different allogy, and our episode on lobbying, which
is how how much credibility can you give two laws
(42:03):
when we're talking about entities that may be powerful enough
to write the laws that they you know that they
are constrained by and can if so? Can Luxatic could
do that? Can they just? Are they at the point
where they just buy a politician's time? I don't know,
I think I think it maybe let us it doesn't
feel like they owe anybody any favors. Yeah, well, let
(42:28):
I keep thinking about that quote from a show we
did earlier where the guy was on record blah blah blah.
Check it out if you want to, if you want
to hear it. What was it? It was something involving
a sex act, but it meant to be a stand
in for like this guy owns everybody, right kind of Yeah,
(42:49):
and you can you can find it just check out
our check out our earlier. I believe it was strange
news or listener mail, but it's out there, and now
we passed the contact lens is to you, folks. What
do you think should or should not be done about this?
Do you think that this is price couching. Do you
(43:09):
think that it victimizes maybe vulnerable people who have no
other option, or do you think this is just business
as business goes? Yeah, we we want to know. You
can find us everywhere online. If Facebook is working, we're there.
If Instagram is working, we're there too, as well as
YouTube and several other places. Usually it's conspiracy stuff on Instagram,
(43:30):
conspiracy stuff show if you don't want to use social
media because you know you have a problem with it
for one reason or another, Yeah, you don't have to, Uh,
you can call us. We have a phone number, that's right,
it's one three s t d w y t K
three minutes of the time which you shall have to
leave your missive um. Make sure to let us know
that it's okay to use the audio on the show,
(43:52):
and then you might hear yourself at one of our
weekly listener mail episodes. Also, if you would be so
kind as to tell us what to call you, give
yourself a cool nickname. We're cool with anonymous whatever. If
we want to see one of those fancy voice disguise
or things on you, we might even go so far
as to do that. If your story is super cool, Hey,
and if you got more to say, you want to
send us more things, why not use our good old
(44:13):
fashioned email address. We are conspiracy at i heeart radio
dot com, a subsidiary of lookxotica. Kidding, Kidding, Stuff they
(44:39):
don't want you to Know is a production of I
Heart Radio. For more podcasts from my Heart Radio, visit
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listen to your favorite shows.
From UFOs to psychic powers and government conspiracies. History is
riddled with unexplained events. You can turn back now or
learn the stuff they don't want you to know. A
production of I Heart Radio. Hello, welcome back to the show.
(00:25):
My name is Matt, my name is Noel. They called
me Ben. We're joined as always with our super producer
Paul Mission controlled decade. Most importantly, you are you. You
are here, and that makes this the stuff they don't
want you to know. You guys, I am so very excited.
I've wanted to do this episode. I think we all
have for a number of years. First things First, fellow
(00:48):
conspiracy realists, if you're watching this video on YouTube, you
might notice that a writer or die Matt Frederick is
rocking some cool specs. We're all fans of cool sunglasses.
Until very recently, I was wearing glasses on the daily. Um,
I'm terrified of the sun, as you know. You guys
(01:08):
know that. Yeah, so I can't I can't go. I
can't go with the day Walkers unless I have some
sunglasses on. And I was looking some stats. It's crazy
because if you ask people in the US if they
own a pair of glasses, just glasses in general, prescription whatever,
whether we're talking about really nifty product or RayBan sunglasses,
(01:32):
or whether we're talking you know, bifocal lenses you would
get at lens Crafter. Is the answer from those people
is probably gonna be yes of women in the U
S where sunglasses as of dudes do the same, and
prescription sunglasses are also on the rise. It's just it's
(01:52):
a big, big, big, big business. But according to the critics,
and as everybody knows if you listen to our recent
conversations on Strange News, according to the critics, there's something
wrong with this industry, something deeply wrong, and you'll hear it. Yeah,
and you know, there's also something wrong with my classes
(02:14):
because I'm wearing contacts right now and these are corrective lenses,
and I'm getting a headache. So I'm gonna take giving vision. Well,
but you need those glasses or those contacts. That's something
we'll get into too, because look, the critics are saying
that you can go into a Pearl Vision, you can
go into a lens Grafters sunglass hut, you can go
(02:35):
wherever the heck you want, and you can buy whatever
kind of glasses or frames you want very expensive ones
to bottom of the barrel, and those brands and those
different prices don't actually matter, because, according to the critics,
you are ultimately buying your spectacles from one very very
powerful company, Luxotica, and how it's usually known and they've
(02:59):
got a different official name now, but we're finally doing it.
You guys, how ridiculous will it be if this is
the episode after these many years that sinks our show
because Lexata is seriously like super powerful. They're like the
Illuminati of spectacles. Here are the facts. Yeah, I mean
their name even sounds kind of like Illuminati. Um, yeah,
(03:20):
it's true. I mean, so the founder of Luxotica is
a dude name Leonardo del Vecchio. He can't have a
name like that unless you're like the eyeglasses mogul um.
But he established Luxotica at a gordo in the Belluno Dolomites,
which as a region of Italy. Uh. And the name
(03:41):
is derived it's like a cool portmanteau combination of the
Italian words for light and optics loose and ottica. You might,
you know, like the there's like a Roman phrase lux
e turna that means like the eternal light of God.
That's what I always think of. And they call this
a deck. This a perfect marriage. Also, I didn't, uh,
(04:04):
I mean to over emphasize this in the notes. If
you saw the notes we have here, this is that
line is in all caps. Sorry, guys, it's it's not
that porto. It's just being lazy. But but that is
that is a really cool name. And in its early
years this company wasn't a huge, huge player. They made
(04:25):
accessories for the optical industry, they manufactured components, they didn't
make their own glasses entire and del Vecchio saw some
opportunity here, and maybe it was a little bit irritated
because he might have felt he was leaving some money
on the table. He had originally started his career as
(04:45):
a metal worker, but when he moved from Milan to
a Gordo, he wanted to get into eyewear. And he thought,
you know, I've been doing this for a few years.
I can make parts for spectacles all the livelong day.
But what if, he wondered, I could sell my own
complete frames. And he did that in nineteen sixty seven
(05:08):
with the first Lexotica collection, and people loved it. People
were on board with it. Still wasn't enough. Let's fast
forward to seventy four. Yeah, at that point he's like, Okay,
we've made the metal to make the stuff. Now we're
making the whole frames to make the thing. And then
he's like, well, what if we could do more than
just frames? And he thought, well, how do I get
all of these things lined up vertically for my own
(05:32):
for my own wealth? And again like this is, in
my opinion, this is great. This is somebody who's thinking
really big, right, this is uh. I don't know the
backbone of industry, of capitalism when it's when it's workings
figuring out how to do it, so uh, but he
the whole idea is he wants to vertically integrate as
much of the the glasses, business, frames and all as
(05:55):
he possibly can. And the interesting thing too is, like
I mean, del Vecchio like his background was in materials,
like he was a metal worker. He was basically like
I think, an apprentice and never really went to college
or definitely never completed college. But everything that he learned
he did so kind of by the sweat of his brow.
And the bigger picture of lexotica that we're already just
(06:15):
starting to dip our toes in the notion of like
taking those materials, making it all about the supply chain
and the materials and kind of leaving it to others
to do the design work. Though he was into that too, um,
but he's sort of setting the groundwork for this master
plan that we're getting into. Yeah, yeah, very much so.
And vertical integration is a kind of unsexy term for
(06:38):
an amazing, impressive and at times dangerous practice, a dangerous strategy.
I was thinking of different examples. So, like, imagine we
get together and we make potato chips, conspiracy chips, whatever
you want to call them, and we're doing all right.
You know, we got four or five flavors. People are
into them, but we want to go bigger. So if
(07:00):
we were vertically integrating, we would also start maybe owning
stores that sold the chips. Maybe we would start owning
the potato fields. Right, we would start bringing everything in,
as you said, Matt, under one figurative roof. And this
has a lot of advantages for the people who are
able to pull it off. So by the seventies, del
(07:22):
Vecchio is selling luxotica glasses directly to customers, and he
ends up like you are alluding to know. He ends
up buying a distribution company, and this sets off this
period of hectic acquisitions and partnerships throughout the nineteen eighties.
The company expands, it blows up, really, it explodes internationally,
(07:43):
and then something interesting happens in the world of fashion.
As you know, I'm not a person very well acquainted
with fashion, but in the in around the nineteen eighties,
a lot of people started saying, you know what, classes
aren't just helping me see better. Glasses can be a
fashion statement. And now you know, now we live in
(08:04):
a world where some people wear glasses just because they
like the look. There's not a corrective lens. They're just like,
I'm hot stuff with these Warby partners. I call those
glasses pretenders, Like I'm all about a good sunglass, but
I don't. I think if you don't need the lenses,
it's not cool to like be a be a fake
glasses where during daylight hours, Hey, come on, now, don't
(08:25):
throw it too much. Shay, I've I've I got those
blue shift lenses or the ones that aren't corrective. But
blossers are great and they look I like, I like
the way they look. At least something functional that's at
least doing something functional. Isn't that supposed to like make
you like less depressed or something like like eye strain?
(08:45):
I think yeah, But but it's it's true. Regardless of
how I mean personally feel about it, glasses started becoming
something more than a medical device. They became a fashion statement.
And Lexotica was very much in the in on the
ground floor of this shift in attitude. They were arguably
(09:06):
in on the ground floor because you know, they owned
the ground by this point. But they partnered with our money,
which is like, that's a big deal. Our money is
known for being kind of expensive. Well, let's also consider,
like I mean, you know, in pop culture, like wearing
glasses was a sign of considered like a sign of
weakness or a sign of being some sort of like
(09:27):
nerd uh. You know, Clark Kent has to take off
his glasses to become cool, and when he puts them on,
nobody notices them because he's you know, a glasses wearing outcasts.
That's true in film and TV and all that stuff
in comic books. But because of Lexotica and this relationship
with our money and more, you know, moves that they
would go on to make they kind of essentially almost
(09:49):
single handedly made glasses cool and and like a fashion
accessory rather than you know, the mark of of someone
that was like, you know, less than It's weird how
public opinion can shift so easily. You have the right person,
the right influencer rocking glasses and millions of people can
change their mind or change their attitudes about them. Uh
(10:11):
Looxotic a new This was a huge opportunity, and they
started making partnerships with pretty much every design house that
you could easily think of. And then there's another big shift.
So we're kind of, um, we're giving you the high
points of a very complex story with a lot of steps.
But if you're telling this story of Lexotica, when you
(10:35):
talk about Lexotica today, you're probably referring to something that
happened in October of eighteen, which I think all three
of us would like to talk a little bit about.
From the legal side, Lexotica had a merger and they
created a new powerful holding company the name of Lexotica
now where there it's holding company is or Lexotica all
(10:57):
one word. When this thing happen, it created what's called
market capitalization of around seventy billion dollars. Not bad for
a hometown guy from Milan, you know what I mean.
Like today today, this guy del Vecchio is worth an
estimated thirty one point one billion dollars, just as as himself,
(11:21):
not as his company. So like this merger though, it
had a lot of people worried, didn't. I mean we
all watched this war story talk with one of the
lawyers involved. Yeah, I just will jump in really quickly.
So s Lore was a free standing French company and
they specialized in manufacturing lenses. Okay, and when you've got
the frame manufacturer in Luxonica going hey, let's get let's
(11:46):
merge with this lens manufacturer specialist and create one giant thing,
you could imagine that this was um a bit worrisome
for people who are looking looking for that big m
somewhere in there, well monopoly action, just to see what
could happen. Yeah, but the merger was weirdly like not
that contested if i'm if I'm yeah, because there's that
(12:10):
there's that point where they said these are not things
people have to have, like rebands are very popular, sunglasses,
but they the authorities what who knows what the back
room situation was like. But the authorities officially concluded after
long conversations that ray bands and a lot of sunglasses were,
(12:34):
in fact, what they call it, they were not must
have must have items. Yeah, and I mean, you know,
and that's that's certainly true. That they're more of a
status symbol in many ways, and they are like a necessity.
You can buy a pair of twenty dollar you know
gas stations sun much, which ironically ray bands used to be.
There was a period where like ray Bands as a
freestanding company were like failing after you know, getting a
(12:56):
bunch of hype because of Tom Cruise wearing them in
risky business, and I believe also in Top Gun where
he had more of this the mirrored shades. Um they
kind of took a dive and we're struggling, and there
was a period in the late nineties. Or you could
buy a pair of ray Bands at like a drug
store for you know, Bucks and Lexotico and they you know,
bought that brand or whether I'm not quite sure exactly
(13:18):
the relationship because they have various arrangements, but they turned
it around and made it into one of the most
recognizable you know, luxury quote unquote you know glasses brands
in the world and made it, made it, made it
like a status kind of thing or like a symbol
of like, hey, I can afford to spend hundred and
fifty minimum hundred and fifty dollars on a piece of
(13:41):
plastic that I put on my face. But the thing
is it's not just ray band, right, Nope, And there's
a lot of stuff people get wrong about it. Uh,
they can. There's this status I want to bust later
on in the show today. Uh, and folks familiar with
the story, you can probably yes, what that statistic will be.
(14:02):
But you're absolutely right, Matt. We can. We can laundry
lists them, but we're not gonna launchry list them all
because the show would just be us doing that for
like easily thirty minutes. That's how deep this goes. The
company still make sunglasses, they still make prescription frames, and
if you talk to them, they're two big like buckets
(14:24):
are retailed distribution selling sunglasses, frames, lenses, and stores, and
then the other one is manufacturing or wholesale distribution. So
they're not selling directly to consumers in that point, but
stores that they own, all the damn stores they own. Yeah,
let's because they own some brands like you. You might
(14:47):
you might think, I can't wait to buy my Vogue glasses.
But do I choose between the Vogue or do I
choose between the Oakley? The same company makes those. Again,
these glasses are seen as a fashions statement, and they're
they're supposed to have certain connotations, right because whenever you're
buying something that has a brand, you are buying an
(15:08):
idea more so than a physical product. And that's just basic.
That's day one stuff baby in the world of advertising.
But they also they don't just own a bunch of stuff.
They also make these licensing deals or these partnerships with
names that are familiar to anybody in the world. Chanel, Coach, Brooks, Brothers, Polo, Ralph,
(15:31):
Laura and product of Versace, you name it. They're they're involved.
They got a hand in the pie legacy companies like Tiffany,
you know, I mean and and that that relationship involves,
you know, those companies basically licensing out their designs to Luxotica,
who then get to slap the you know, adults and
Gabbana little logo on the side and therefore they cost
(15:54):
a thousand dollars. But they are not made of magic,
you know, I mean they're they're made of this materials
and everything else is and don't cost near that to manufacture.
I mean, it's it's like insane markup on the especially
the luxury kind of licensed ones. You guys forgot Michael
cores and just want to point out, according to Marshall's
this shirt is Michael Coerce. Oh yes, sorry, sorry, Mike
(16:18):
respects credit where its due. These these things are all true.
And if you travel around the world, you might not
know that there's a Luxotica operation you're you, but there
probably is. There thousands, thousands of retail locations and multiple countries,
the US, North, South America, China, South Africa, the United Kingdom,
(16:41):
the United Arab Emirates, etcetera, etcetera. But if you walk
into an eyeglass store sunglass store in these areas, you
might not know you're walking into a Luxotica store. You
might think, should I go to Sunglass Hut or should
I go to Apex by Sunglass Hut, Or should I
go to Spectacle or should I go to Lens Crafters
(17:02):
or maybe Pearl Vision huh Target Optical. Yeah, I've been
there and targets have a lot of lenses that you
can buy or O P. S M or or a
Lori or hey, what about you know, getting my vision
care covered? These frames are expensive, these prescriptions are expensive.
Uh maybe I'll use imed vision care. That seems legit
(17:22):
and unrelated to any of these other things. Wait, I'm
on their website now, and oh why is target optical
list and sunglass hut vision lenscrafters Wait a minute, OSM
one sunglass understand the darkness behind them? Yes, it's true.
(17:46):
It's all true, folks. They're not different. Fingers on a hand,
that is what we're talking about, fingers on a hidden hand.
And for some people that's well and good, that's hunky dory.
For other people, that's a huge problem. Because Exotica Argue
has become more than just the big boy in the room.
It has become a monopoly, and therefore it has become dangerous.
(18:08):
So we're gonna pause for word from our sponsor, and
we're gonna return, separate some fact from fiction and figure
out just how much of this, if any, is true.
Here's where it gets crazy. Uh, finally to the statistic
All right, Matt Nol, You know you guys, and I
(18:30):
talked about this off off air. That's something that gets
thrown around all the time. You'll hear different versions of it,
but it's usually something like, you know, Exonica controls the
entire sunglass industry. Something must be done. I don't know.
That voice is vaguely related to macho man Randy Savage. Um,
you know, I guess got into optometry or whatever. But
(18:52):
he always were he always were locally type shades you
see in his eyes, So snap into a monopoly. What's
up with the statistic? Well, it makes for great headlines,
that's inarguable, but it probably isn't accurate. And I dug
in a little and I think I've figured out part
(19:15):
of the discrepancy. I want to see what you guys
think about this. So if you go to the company itself,
they'll be like, yeah, we're doing pretty well. We're pretty
we're pretty proud of ourselves, but we don't sell eighty
percent of all the glasses in the world. They'll tell
you that their frames, just the frames are probably maybe
ten percent of sales worldwide, and in the US that
(19:38):
number bumps up to about so one in five frames.
Just in general, frames that you buy in the US,
one in five of those is probably made by Lexotica
in some capacity. But Snopes broke this down a little bit,
and we need to learn the history of this statistic
and how I think how the wires got crossed. This
(19:59):
is not meant to defend Lexotica, just to be clear,
We're just trying to be accurate here. There's an episode
of a show called Adam Ruins Everything, and it's Adam
Ruins Everything. I think is a solid show. And in
this show they talk about In this episode, they talk
about Lexotica, and one of their sources is a blog
from Forbes written and that blog cites this statistic and
(20:24):
it refers to another source of Forbes article from two
thousand twelve. Here's why I think happened. If you look
at that two thousand twelve article by Dean Crutchfield, you'll
see the claim that more than eighty percent of major
eyewear brands are designed and retailed or sold by Lexotica.
(20:45):
That's not the same thing as of all glasses ever ever. Ever,
it's more like it's it would be like if you
had a shoe company and you controlled eighty percent of
sneaker brands that's not the same thing as eight percent
of all shoes. Does that make sense? That does make sense.
And I will say too, I watched a sixty minutes
(21:06):
UM episode. It was called Sticker Shock, and it was
all about like it was there kind of deep dive.
This is before Lexotica was a much of a still
not really a household name, let's come of the point.
But it was really like it felt like investigative journalism
at the time because it was sort of like almost
this shadowy company, UM. And the headline was why do
designer glasses cost more than an iPad? Uh, the eyewear
(21:27):
company with total domination setting astronomical prices. We're gonna get
to that a second. But at the time, the CEO
is interviewed by Leslie Stall says that he she asked
some point blank, how many people do you think are
wearing glasses that are you know, in some way touched
by Alexotica, And he just said something in the neighborh
he said billions, billions. So whether or not it's eight
(21:50):
percent of the overall market share, I mean billions of people.
You know, by the admission of the CEO, who's probably
a job, is that the soft pedal. These ice the
ideas of monopoly. Uh, that's kind insane and definitely show
some serious domination of that space. Oh yeah, and there's
not really am The thing that's fascinating is there's not
(22:12):
a ton ton of information out there. There's not a
lot of you could say, visibility on some of the
ins and outs of how these how the money moves
in this situation. And that's always something that you want
to look out for when you're trying to figure out
if something is a monopoly. There's no mistake Exotica is
(22:33):
indeed a leviathan. It is the largest single player in
its industry. But is it a monopoly? Yeah, of course
it is. It would be. How could it not be.
Exotica doesn't just own eyewear brands and frames. They don't
just own distribution, They own insurance services. They have made
(22:54):
these strategic partnerships and acquisitions that give them a significant
a significant amount of leverage on the price of a
pair of glasses. They can kind of decide how the
market moves. And there are plenty of people who will say, well,
what's wrong with that? And there are plenty of people
say that is food bar a lot of industry veterans
(23:17):
have have a complex relationship with Lexotica. There's one guy
who found quote in l A Times, Charles dahan Uh.
He used to be the main dude supplying frames to
the company Lens Crafters, before they were acquired by you
guessed at Lexotica, and he says there's no real competition
(23:39):
in the entirety of the industry anymore. He thinks Lexotica
is a quote from him. They bought everyone and they
set whatever prices they please, and those markups can be
incredibly high, as anybody's ever purchased glasses can attest. Like
the when we're talking about a markup a profit margin,
the numbers might surprise you. Yeah, there is a pretty
(24:01):
great article from The Guardian, if I'm not mistaken, where
some former lens Crafter high level execs we're talking about
the markup being like bordering on a thousand percent. Well, yeah,
I mean think about it. Look look at these Look
at these things. How much did these cost there? I mean,
I get it, you're molding some pieces of metal and
(24:22):
some plastics and the lenses aren't you know, simple to produce?
But should this be like three That's what they charge
people in these like lens crafters, like stores, especially when
you're getting your eyes checked and everything. These are these
are some of the cheapest glasses I could find, and
even with eye insurance, I had to pay a lot
(24:43):
of money for these. And it's like, I just I
don't get it as a consumer. Just just really quickly.
The CEO Andrea Guerrera in that sixty minutes piece, I
mentioned his defense of that as well. This is an
item that you have to wear on your face all
the time. It's the perfect crystallization form and function, and
that's not easy to do. That's that's that's what he
(25:04):
has to say. Yeah, because there is a lot of
research that goes into this, right. Uh. There there are
people who disagree with that estimation, folks like a journalist
named David Lazarus who was writing for the l A Times.
He didn't really mince words when he called prescription I
wear quote perhaps the biggest single mass market consumer rip
(25:26):
off in the world. Yeah, I know, right, and oil
companies are still a thing, but whatever. In he broke
down the math and he verified that the average cost
of a pair of frames not lens his mind, to
just the frames was about two and thirty one dollars,
and that was according to VSP. The SP is the
(25:47):
biggest provider of um I I care I insurance benefits.
So if you look at the average costs of a
pair of just single lenses, that's a hundred and twelve dollars,
and those are the simple lenses. If you need some
bells and whistles, then the price can double. So if
we just take the base value there two one plus
(26:10):
a hundred and twelve, then what we see is that
three hundred and forty three dollars tens would be the
average that people would pay all told, not counting an
eye exam. I think that's exactly what what these costs.
And these are made by I'll tear, another company, not Luxotica.
All tear is associated with VSP, like directly associated with VSP. Yeah,
(26:36):
what the heck are we being had the question? Uh? Yeah,
And of course people also pay a premium for designer brands.
Again many many of these brands are owned by Luxotica
or Lexotica as a hand in their production. So naturally
this causes people to say, what am I paying for?
If so many of these glasses are made in the
(26:57):
same place. Is the difference, just like a logo stamped
on the side, Are the pricey posh glasses essentially the
same as the stuff at the lower end, And it's
it's a it's a good question. But to be clear,
you know they have different designs and things like that. Uh.
Supporters of this system say, look, these costs are justified.
(27:18):
You're not just buying a pair of glasses. You're you're
buying the association with the brand. You're buying the designers work,
you're buying the research that goes into making new frames,
better lighter lenses, and ongoing innovations. But to a lot
of critics, this one company, as David Lazarus put it
in his articles, is getting away with fleecing people for decades.
(27:41):
And you know who agrees. The guy who founded lens Crafters.
What yeah, he's he's an interview and he's like, oh yeah,
this this markup is real. His name's E. Dean Butler.
He says, you can get amazingly good frames for four
dollars to eight dollars, and then for fifteen dollars. He says,
(28:02):
you can get designer quality frames, mad stuff, you get
it product And yeah, this is real. This is real, Uh,
but it still doesn't have It's not product though. You know,
it's all about that stamp. It's all about that like
status symbol, you know what I mean, Like there are
people that really matters to I'm know, how many stamps
(28:23):
you can make for several hundred dollars I can. I
can put product on everything I own a couple. It's
it's the same with like shoe people, you know, like
you know, hype beast type stuff, with like particular brands
of shoe that are crazy amounts of money, or it's
about scarcity. You know, it's a combination of all that stuff.
But you know, it is more about this manufactured idea
(28:47):
that Ben was referring to than it is about the
quality of the actual good. I have plenty of cheap sunglasses,
but I also own a pair of hundred plus dollar
ray bands because it made me feel cool to own
them and me feel like I was in some kind
of club. I'm gonna be completely honest. I know it's
sort of pathetic, but it is what it is, and
people a lot of people feel that way. No, it's
definitely a lot of people do feel that way. It's
(29:10):
a natural human instinct, you know, and I wouldn't drop
one more piece here. Butler also says that when it
comes to lenses, they cost about a dollar a pop.
Two dollars in fifty cents. Those are the lenses. These
all the same components we just described, can be you know,
(29:32):
they can be combined into spectacles or sunglasses, and those
can sell for as much as eight hundred dollars us.
This is this is kind of nuts. Now. Of course,
if it's your money, it's your money, and spend it
as you choose. No one's here to tell you what
to do. But I think it's a good question for
us to ask, which is how much of a role
(29:56):
does Lexotica play and setting these prices? How much should
they play? And why is? Why are those questions important
in the first place, Because right we're talking about just sunglasses,
We're talking about just classes that might not seem important
to a lot of people. But we're gonna pause for
word from our sponsor and we return. We're going to
dive a little bit deeper into why this matters. We've returned, Okay,
(30:25):
so that's the situation. What on earth are we supposed
to do? First? We gotta admit corrective lenses and glasses, right,
they have ascended to the level of fashion, but they're
also still medical devices. They're necessary for billions of people,
and that means it becomes, arguably, I think there's a
(30:47):
solid argument it becomes a medical concern, like part of healthcare,
you know what I mean, Like people people need to
have glasses for more than just looking cool. That's why
I wanted to talk about this so much with you guys,
because that's the only reason I have classes, because I
had to. I couldn't see right. And the first pair
of lenses I got was that a lens Crafters. I
(31:08):
remember it very vividly. Uh it was. It was at
North Point Mall. Oh my god, I'm I can see
the whole thing happening right now. It was not crazy expensive.
I didn't have vision insurance or anything like that, and
it wasn't crazy expensive. I remember the lenses themselves being
really expensive. For some reason. I don't know. Maybe I'm
(31:28):
misremembering that I don't have to right to my parents
or something that was a kid and I've I remember
something like there was such an up cell while I
was in this place that's supposed to be an eye doctor.
But it really felt like a lens distribution like store, right,
I mean, it's what it felt like exactly. It's it's
(31:50):
it feels like it's more of a store that also
has an eye doctor working there, right, Yeah, And that's
that's very common set up, you know. And even if
you don't like glasses, but you have to wear them
and get the eye exam, you're probably gonna look for
the easiest answer. Right, So you've just had your eye exam,
they've got your prescription. Why not knock it all out
(32:11):
while you're here? Why not get the contacts? Why not
get the get the glasses. And even if you can
point to examples of glasses that are more expensive just
because they're fashionable, we can't escape. We cannot escape the
simple fact these are not nifty little sartorial nods for
most people wearing them. They're necessary. You need to see.
(32:32):
And if there's one company raining over an industry that important,
then those folks have no choice but to interact with it.
That's it. There's no other option. And that doesn't like
and maybe it's maybe it's helpful in the long term
for this company to have many guys is for it
to appear as though there are many many more manufacturers
(32:55):
and many many more stores then there are in reality.
But how do you fix it? You know, would you say,
would you say, okay, we need Uncle Sam to step
in and prevent price gouging, right, like, uh, consider the
example of insulin insulin had the price has exploded right recently,
(33:17):
and it really shouldn't, is it? Is it only a
monopoly if it's something that people need, like like like
like like the like the internet, like telecom or whatever,
it's maybe a little easier. The barrier to approving a monopoly,
there's a little easier. I'm just confused, Like this seems
like a straight up monopoly, and yet they were allowed
to have that merger where it's all of the pieces
(33:39):
of the puzzle, you know though, the lenses and the
and the and the frames. But yet they it's sailed
right on through with very little um pushback from regulators.
So I'm just wondering, like, is it because but but
then the medical device, you know, angle of it, especially
the fact that they literally own that insurance Carrey we
talked about i met Vision, which self proclaimed uh the
(34:02):
second largest vision benefits company in the United States, serving
approximately fifty two million members, And who do you think
they cover? Where do you think that the places that
that you go that are like in network are it's
as places I named off at the beginning of the
show that we that we mentioned that they also own.
So how is that not a total conflict? Avenguer, I
(34:23):
shou'nt understand how this is allowed to Yeah, a monopoly
doesn't have to be over necessary good. Uh, it could
be like a not you could have like back in
the day, you might have a monopoly on the fur trade.
People like wearing fur. They're like using it for stuff.
But you're not gonna die or have your quality of
(34:45):
life significantly impacted if you don't have, for right, in
the case of clothing, you just wear something else. So
that the argument there is that again these are not
must have items, these are optional, But that isn't really
the case. It's it's not basically untrue, but it is
a little bit misleading to frame it that way, especially
(35:06):
when you consider how convenient that makes the company's position.
So how would you if you said this was price gouging,
how would you tackle it? You know, would you take
an approach similar to the way regulators have tackled the
pricing on EpiPens, which is definitely must have item for
some people. Uh, if you're a fan of the free market,
if you fall more on that side of political economic philosophy,
(35:30):
you might say, I don't know. I think the government
interference for sunglasses or classes in general, I think that's
a bridge too far. But there's a response to that,
and I think it's a response. It's fair to ask,
didn't a free market paved the way for Luxotica in
the first place. Like their Again, their perspective is, you know,
(35:51):
we're doing very well as a business. That's what we
do and and we're the best at it. But we're
not some kind of evil empire. We're giving They'll say,
we're giving people a ton of options. You know, we're
giving them a ton of choices. Right, Not everybody has
to buy eight hundred dollar glasses. We have other stuff available.
(36:12):
That's their argument. But you can easily see why a
lot of folks would have a problem with that, both
inside and outside the industry. UM. One thing that we
should note is this may not be the situation for
forever or for long, because now there are new competitors
out there, their places like U Zenny. You guys remember
ny people love Zenny because they make stylish looking frames
(36:36):
for an affordable costs. Because I am uh sponsored by them,
No I'm not, but like or like Warby Parker, you know,
they kind of cornered the market on internet only frames.
But the question there is like are they just gonna
We didn't talk about this, but I'd love to bring
it up. Oakley. We we mentioned and I think I'm
maligned somewhat. Sorry any Oakley Wears out there, But Oakley
(36:59):
kind of called them on this stuff as a company.
They called them on this price fixing, you know, Shenanigans.
But what do you think of Exotica? Did they dropped
them from all their stores and then they and then
they bought them over over we sank their stock by
(37:19):
because they again, if you're the only game in town
in terms of retail aside from little niche you know stores,
I mean sunglass Hut, that's kind of where it's at.
It's in every mall you think of, like where do
I go to get sunglasses aside from like some cool
local store that sells all kinds of stuff, or maybe
like you know, boutique type type shops you're gonna say
sunglass Hut or one of those places. So if you're
(37:40):
product is dropped from the one kind of hub for
buying sunglasses, you're screwed. And then once there's once they're
their stock price tanked. Uh, they bought them for like
a deep discount. That's some real I drink your milkshake stuff,
you know what I mean. And it was, it was successful,
it worked. You will you'll see other people criticize Lexotica.
(38:02):
This is not necessarily a hidden thing. It was last
week tonight. I had a piece on it. We mentioned
Adam Ruins everything. There's been a lot of reporting over
the years, but the situation hasn't really changed. That's that's
the thing. People might be more aware of it, but
that's that's not stopping what people would characterize as monopolistic practices.
(38:27):
And this is not a case like the de Beers cartel,
which has to advertise in the US through a number
of other fronts. You know what I mean, Lexotica is here.
They actually just relocated a bunch of jobs to Dallas. Uh.
They've been expanding during the COVID pandemic. They've got they've
got irons, irons in the fire, and it makes me
(38:47):
wonder what the future is out there or what it
should be. Right, should authorities interfere with this? Should they say, hey,
this is we're we're using antitrust laws to break up
this monopoly. Lee. I don't know, because right now, the
at least in the US, the government has been very
very friendly to monopolies. Check out our two part episode
(39:08):
on Lobby. Yeah. Well, and add to that, this year
in March s a lord Looxotica acquired another giant company
called Grand Vision for eight eight and a half billion dollars.
So like they're they're still expanding. It blows my mind
(39:29):
to imagine that they are already that big and they're
just going to continue The blob is going to continue
expanding out yea, yeah, for sure. I mean it does
that surprise you though, I mean, it seems like it's
what they've what you know, from back when our boy
Leonardo was just a wee lad you know, in uh
in Milan. He had a dream and it wasn't to
(39:49):
make handmade artisanal glasses for the people. It was to
be like the octopus that that that that makes glasses
for the the universe. You know, well, you right. But but
but it's a weird situation where for this specific one
in March that they just got antitrust approval for whatever
it is. To to go along with the acquisition, they
(40:10):
have to sell off a bunch of their stores in
Italy and the Netherlands and a couple other places in
order to have more stores under this new brand that
they're purchasing. Um, it's just a strange shuffling in the
end too, I think by for more market share, but
I don't know. I'm not like that attorney who was
being interviewed for that one thing. We watched. Everybody on
(40:32):
this call watched. It's just so nonchalantly talking about how
it's not a monopoly. We like to do what we
want to take away. But yeah, check that out. Just
go to YouTube and search war stories like exotica. I
think that will get you there. Um, it's an interview
with the lawyer who shepherded a lot of that merger.
(40:55):
So that that is where that is where the state
of classes is at. And increasingly people are, oh, forgive
me seeing the situation with more clarity, But that doesn't
necessarily mean anything but change. And there are a lot
of people who think maybe stuff shouldn't change. Maybe that's
(41:16):
just how the spectacle sausage gets made, you know what
I mean? Maybe I know, not a pleasant not a
pleasant image. But we we hope we've been fair at
least to to give you luxotic as perspective as well
as the perspective of other people. But the truth of
the matter is that these things are relatively inexpensive to manufacture,
(41:39):
and they are sold with a very high profit margin.
That's not necessarily illegal, at least as the law stands now.
But then you have to ask yourself one of the
questions we ask ourselves in our episode on Alec not
Baldwin a different allogy, and our episode on lobbying, which
is how how much credibility can you give two laws
(42:03):
when we're talking about entities that may be powerful enough
to write the laws that they you know that they
are constrained by and can if so? Can Luxatic could
do that? Can they just? Are they at the point
where they just buy a politician's time? I don't know,
I think I think it maybe let us it doesn't
feel like they owe anybody any favors. Yeah, well, let
(42:28):
I keep thinking about that quote from a show we
did earlier where the guy was on record blah blah blah.
Check it out if you want to, if you want
to hear it. What was it? It was something involving
a sex act, but it meant to be a stand
in for like this guy owns everybody, right kind of Yeah,
(42:49):
and you can you can find it just check out
our check out our earlier. I believe it was strange
news or listener mail, but it's out there, and now
we passed the contact lens is to you, folks. What
do you think should or should not be done about this?
Do you think that this is price couching. Do you
(43:09):
think that it victimizes maybe vulnerable people who have no
other option, or do you think this is just business
as business goes? Yeah, we we want to know. You
can find us everywhere online. If Facebook is working, we're there.
If Instagram is working, we're there too, as well as
YouTube and several other places. Usually it's conspiracy stuff on Instagram,
(43:30):
conspiracy stuff show if you don't want to use social
media because you know you have a problem with it
for one reason or another, Yeah, you don't have to, Uh,
you can call us. We have a phone number, that's right,
it's one three s t d w y t K
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leave your missive um. Make sure to let us know
that it's okay to use the audio on the show,
(43:52):
and then you might hear yourself at one of our
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yourself a cool nickname. We're cool with anonymous whatever. If
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as to do that. If your story is super cool, Hey,
and if you got more to say, you want to
send us more things, why not use our good old
(44:13):
fashioned email address. We are conspiracy at i heeart radio
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(44:39):
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