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Issue link: http://digital.canadawide.com/i/526329
july 2015 BCBusiness 73 BCBuSINESS.CA $6 million in an IPO to acquire Sweden's Lensway AB, a leading European online optical retailer. Terry Vanderkruyk had sold his recruitment firm and joined Coastal's management team in 2006—by which time the company had $81 million in annual sales—and one of his roles was to source and vet acquisitions. These included leading online contact lens companies in Japan (contactsan.com) and the Netherlands (mylens.nl). Vanderkruyk says the fast-paced environment of e-commerce, with mul- tiple competitors and multiple markets, suited Hardy's competitive nature very well. "You have no idea the imagination that he has," Vanderkruyk says. "He would come up with an idea in the middle of the night about a business someplace else in the world that we could buy. The next day we would be eating frogs' legs in Singapore." In 2008, the company made its big- gest move yet with a decision to manu- facture and sell eyeglasses. This was part of Coastal's strategy of investing ahead of the adoption curve; many said that people wouldn't buy glasses online. Hardy admired what online shoe retailer Zappos had done in the shoe category: convincing people to buy shoes without trying them on. He thought he could do the same thing with glasses. He flew down to Las Vegas and spent a day with Tony Hsieh, CEO of Zappos, and they talked about a customer-centric model that allowed a risk-free purchase. Hardy wanted to continue the fast shipping that customers appreciated, and he couldn't find a factory that could meet his demands. So Coastal built a state-of- the-art facility at Broadway and Renfrew in east Vancouver, at which prescription lenses were moulded into brand-name frames. The customer came first; there were free and easy returns, a first- pair-free promotion, and much-lower- than-retail prices. By 2011, the lab was making and shipping more than 2,000 pairs a day, with eyeglasses accounting for 20 per cent of that year's $184 mil- lion in sales. Customers' buying habits had shifted; eyeglasses had moved from necessity to fashion accessory. Hardy believed in constant change to maintain growth. As Coastal invested more and more in acquisitions, inventory, warehousing, marketing, customer ser- vice and manufacturing equipment, sales flourished—but the company also posted losses in five of the eight years before it was sold. "That's how marketing works," he says, acknowledging that people often question investments when they don't seem to pay off. "It's flywheel, flywheel, flywheel—and then it starts to spin." I n 2010, in what Hardy would undoubtedly see as another moment of serendipity, a then-30- year-old named Sean Clark chal- lenged Hardy to a squash match at the Jericho Tennis Club. Clark had spent his 20s travelling and bartending ("It was a degree in international rela- tionships," he tells me, straight-faced) and was then in the first year of UBC's MBA program. If I win, he told Hardy at Jericho, you give me a summer intern- ship. Clark did not win, but he got the internship anyway. "I think he liked that," Clark recalls, "the audacity of this kid coming up and saying 'I challenge you.'" Clark worked at Coastal for the summer and loved the workplace culture. He felt something "noble" about the company purpose, which was making eyewear cheaper and more accessible. He also liked the underdog struggle for market share in a category dominated by Italian frame- maker Luxottica and French lens-maker Essilor International. In October of that year, Clark was in Milan finishing his MBA when he received another job offer from Hardy. This one was to open a Clearly Contacts operation in Australia. "He said, 'Go to Australia and figure it out.' That was literally it." Shortly after landing in Sydney, Clark called up a couple of his bartend- ing friends who were now working in commercial real estate to help him set up a warehouse and an office. Hardy now gives Clark credit for a fast-grow- ing early operation in Australia, which soon generated more than $10 million in sales, and for coming up with the idea for Shoeme.ca. Soon after Zappos pulled out of Canada, he wrote to Hardy, "Online footwear category leaders are in every advanced economy except Canada. This could be us." Hardy agreed: it was a fragmented category with inconsistent service. He suggested they