Roger Hardy takes a rare break in his Hermosa Beach home in California
Roger Hardy built Clearly Contacts into the world's largest online retailer of contact lenses. Now he's about to revolutionize the way we buy shoes
The small, angular man in the grey suit sitting next to me on the Los Angeles Metro bus doesn’t take long to strike up a conversation. He is a car salesman, I am a writer, so naturally we are sponging each other for information. He knows from my accent that I am not from here (“European? Australian? Canadian”), and he gathers that I am married (“But why are you hiding your ring?”). I learn that he doesn’t smoke or do drugs or drink, and his name is Gary Holt. As we pass block after block of unadorned shops (Food 4 Less, Computer Center, Coin Laundry), he tells me his story. He has worked on the same used car lot for nine years. So what makes a great salesman? “Well, you have to listen to the customer,” he says. “They will tell you what they want, and you have to give them what they want. If I treat you right, that means I get a chance to meet your family—and they’ll buy a car, and it goes on down the line. It’s about people.”
I tell him a story too.
I’m actually here to interview a salesman. He’s 45 (“Young!”) and started selling contact lenses (“Contact lenses!”) online in 1999. Last year, he sold the company for $435 million! Gary Holt shakes his head. “Blink of an eye.”
Holt exits the bus at a stop near an underpass, and I continue on to Hermosa Beach. It’s a family-friendly village on the southern beaches of L.A. with a lively mix of small shops and restaurants (Steak + Whiskey, Lavish Home, Wash’n Shine Laundry). A short walk down the beach, at one of the long, narrow homes that overlook the ocean, I find Roger Hardy. He is buoyant and friendly and frequently pushes back his thick, boyish hair. He is here with his wife, Jenny, and their two small children on vacation, but let’s qualify that. Two days ago, he flew back to Vancouver to pick up the winners of a squash tournament he sponsors and take them in his Challenger to Las Vegas for dinner at Nobu and to a David Guetta show. Tomorrow morning he flies to San Francisco to interview a job candidate. The Hardys also have homes in Penticton and Whistler, but this vacation is the first of what they hope will be annual month-long international adventures with their children in Japan, Australia, Italy, France and China. “Work hard, play hard” is how many of his colleagues describe his style, and it’s true: he swam one kilometre in the ocean yesterday morning to prepare for an upcoming Ironman, and later did some surfing. “It’s a good workout,” he says, serving me Mountain Dew in the sunny white living room of this rented home, “because someone else is determining how hard you have to work when the next wave is coming.”
In business, at least, anticipating waves is something Hardy has done extremely well. He rode out the unpredictable years of Internet commerce in the early 2000s and made Coastal Contacts Inc. (Clearly is the brand name in Canada) a model of global success. Now, with many of his team from Coastal, he is building an online shoe empire with Shoes.com Technologies. He also invests in other young B.C. companies that hope to follow in his wake. Sure, Gary Holt is correct: a good salesperson will give customers what they want. But Hardy goes a step further. He gives customers what they will want tomorrow.
“Roger is a builder,” says Chip Wilson, founder of Lululemon. He and Hardy did regular hikes on the Grouse Grind over the time that Hardy was growing Coastal. “He has the ability to see where the world is shifting, four, five, six years out. Like most entrepreneurs, he’s doing something that no one else can believe in because they can’t see the future. He can see the future—and he’s building something now for then.”
Roger Hardy with his wife, Jenny, a former communications manager at Coastal, and their two children
Roger Hardy grew up in Kanata, Ontario, which in the 1970s was a farming town just outside Ottawa. Hardy’s mother, Mary Jane, a high school English teacher and guidance counsellor, tells a story about getting a call from a neighbour when Roger was seven years old. He was at the door, trying to sell used People magazines. Hardy doesn’t remember this, but he remembers someone at his own door. That was Terry Matthews, the father of a boy on his soccer team, trying to raise cash for a new venture. Matthews was an engineer who would deconstruct the barbecue on camping trips, and the new venture was Mitel Networks. The company, which Matthews founded with Michael Cowpland, kickstarted a transformation of Kanata. New buildings, new companies, new streets. Hardy remembers the town sign reading Population 3,000; later it was over 100,000. Matthews later started Newbridge, and Cowpland started Corel. On a field where he used to ride his dirt bike sprang the Corel Centre. Mitel—which would become a global leader in communications technology—morphed and divided and sold several times over, while Newbridge was eventually acquired by French telecom behemoth Alcatel-Lucent for $7.1 billion. “He was an exciting guy,” recalls Hardy. “It definitely left an impression.”
The neighbours who had given Matthews even $1,000 at the door saw their lives change. Hardy’s father, also named Roger—and, like his mother, also a high school English teacher and counsellor (but with a PhD in psychology)—did not. “He was a young man with a young family,” says Hardy. “You can’t blame him.” After his parents divorced, his mother remarried and three older stepbrothers joined the family.
His father encouraged sports, which dominated Hardy’s teenage years. “He was quite a bit smaller than the guys on his hockey team,” says his younger sister, Michaela Tokarski, “but he would always get chosen as the captain.” Hardy went to Bishop’s University in Lennoxville, Quebec, in part because of the proximity to ski hills. He played volleyball, squash and rugby. He majored in political science, “the retailing of ideas,” as Hardy puts it, but wasn’t terribly into academics. “I probably got a higher return than I deserved.”
He was into T-shirts, however. Every fall he would have hundreds made up with slogans ripped from early-’90s Nike campaigns: Just Drink It, Bo Knows Bishop’s, and so on. He went from dorm door to dorm door—and sold out in a day. He also outfitted the fraternities and sports teams. In his fourth year, the university administration finally sent Hardy a warning letter about using its logo.
In September 1993, after graduating with a BA, Hardy returned to Bishop’s for one last T-shirt sale and then headed west in his 1986 Honda Prelude. “I had really only been from Ottawa to Lennoxville, and that was my sense of the world. Everyone said, ‘I’m finished university—I want to travel and see the world.’ But I had no interest in Europe, Asia or anything else. In my mind, the only thing I could envision doing was going to Whistler. I remember seeing the Sea-to-Sky Highway—this unique place where the ocean meets the mountains—and thinking, ‘I’m home.’”
As he pulled into a parking lot at Whistler, he glanced up and saw a friend from his volleyball team at Bishop’s, who offered him a place to stay. It was “serendipitous”—a word Hardy uses a lot. After a winter of skiing and working at Whistler’s Listel Hotel, he packed up his van and drove to Cabo San Lucas, where he spent the summer surfing. In August 1994, he returned to Kitsilano and serendipitously ran into another friend who offered him a place to stay.
He briefly thought of returning to Whistler, but he wanted someday to be able to buy one of the $250,000 lots he had seen there. It was time to get a job, so Hardy went to a recruiting firm owned by Terry Vanderkruyk. “He had lots of energy, he was smart, and he was really good at building rapport,” recalls Vanderkruyk, who was able to see past Hardy’s shoulder-length hair and Doc Martens. “He needed some coaching on new clothes and a haircut, so I did the big brother thing.”
Vanderkruyk helped Hardy land a sales job at Loomis, the courier service. He would walk in the back door of every business in his territory, from Burnaby to Hope, with a box of doughnuts and strike up a conversation. His motivation was twofold. Loomis salespeople from across the country were ranked on weekly sales charts. Hardy started at 119 out of about 140, and within two years, he had reached the top four. He liked the competition—and he also liked the hefty cheque that came with a top ranking. But secondly, he was learning a lot from talking to people about how their businesses worked, devising his own business plans and keeping them in a filing cabinet at home.
By the end of 1996, Hardy had been promoted to national accounts at Loomis, but within two years he could see that the economy was slowing and that the courier business was suffering. He decided to take a job running a medical products franchise for Wesley Jessen VisionCare Inc., where he was selling contact lenses to optometrists’ offices. Having worked in logistics, figuring out how to move goods, he was struck by the inefficiency of the delivery. The patient gets a prescription, goes home and waits for the contacts to be delivered to the doctor’s office—and then has to go back to the office to pick it up. “There was a bunch of strange back-and-forthing,” he recalls. “But probably my main observation was that we were selling contacts to doctor’s offices for $12, and they were selling them to customers for $70. No other business has margins like that.”
In 1999, just as everyone was launching something online, Hardy started to build his own website, called Clearly Contacts. He rented a warehouse in Richmond with a phone line and a computer. Then he flew to San Francisco to visit the office of Snap.com, which was a leading search engine at the time. He wanted his own banner ad to appear on the site when people searched “contact lenses,” but Snap.com wouldn’t return his calls. He walked into the lobby, where a Porsche Boxster was bolted to the wall as a prize for the number one salesperson, and gave his list of words, including “contact lenses,” to the woman at the desk. She took the list back through rows of desks with people on the phones and returned to give him a price: $100,000. They haggled on the word choices until he got down to a number that would almost clean out his life savings: $55,000. At times like this he thought of Terry Matthews. “There’s a moment where entrepreneurs have to decouple from the linear progression of things, step off the ledge and take a risk,” he says. “For me it was an easier step to take because I had seen all the opportunities and excitement [in Kanata] and the things that come out of growing a business.”
Optometrists had assured him that no one would ever buy contact lenses on the Internet, and this made him nervous. But on his first day of business, July 14, 1999, Clearly Contacts received 14 orders; within the first month, sales totaled $68,000. Hardy was using the sales techniques he knew from Loomis—five phases including approach, interview, validate, negotiate and close—translated for the web. Prices were less than half of what optometrists were charging. By November, he had an offer from More.com—a company that aimed to be an online empire like Amazon— to buy the company. The terms of the deal have never been disclosed, but the sale allowed Hardy to buy his first home and invest in several other companies. The owners of More.com had raised $100 million in venture capital aimed at an IPO, and they wanted Hardy’s company to be part of their online pharmacy, Planet RX. They had ads filmed in the Mir space station that were running on prime time during Friends and Ally McBeal. Hardy continued working for the company, managing contact lens sales, but after Internet stocks crashed in March 2000, More.com was done. In August, Hardy bought back the lens business for a fraction of the original deal.
Hardy’s sister Michaela Tokarski, a chemical engineer, was pursuing an MBA at UVic at the time. She negotiated a co-op term so she could help her brother start up the reborn company, this time named Coastal Contacts, in October 2000. Her husband, Derek, took charge of building and maintaining the website. (Their stepfather, Murray McBride, joined the Coastal board in the early years.) “The timing was perfect,” says Hardy about his family joining the startup. “Sort of serendipitous.” Coastal set up shop in another warehouse, with a computer, a ping-pong table and a door laid across two filing cabinets for a desk. The orders came in. “At one point we needed a bookkeeper,” Tokarski recalls, “and Roger said, ‘Does anyone know about accounting?’ I said, ‘I took one course,’ and he said, ‘You can do this. I know you can do this.’ He just has this way of convincing you that you can do anything.”
But since the first iteration of the business had been launched, the web landscape had changed dramatically. An Internet search showed them 1,000 identifiable competitors, and investors were difficult to find after the tech crash. Hardy secured $170,000 from Tom Kusumoto of Mercury Partners, a Vancouver-based venture capital firm, and invested most of that money in inventory. “If I look at how we were able to make up that ground,” Hardy says, “we invested in having the product on the shelves and in really fast shipping. Others focused on marketing but not on having the products, so it would take two weeks to get the lens. Our way was: we get it to you tomorrow morning.”
It was execution, more than innovation, that made Coastal Contacts work, says Ron Cenfetelli, who teaches e-commerce at UBC’s Sauder School of Business. The model itself was essentially mimicking others like Amazon. “It’s easy to look at it through today’s lens and say, ‘Somebody started selling contact lenses online, big deal.’ But that was in the midst of a dot-com crash, and Canada was a backwater of Internet adoption. It was a gutsy thing to do.”
For years, Tokarski recalls, she and Roger and Derek would go to the shipping department every afternoon and pack boxes. “At the cutoff time the trucks would have to go, and everybody in the company would be in there. I think that kind of speaks to the environment he was trying to create. This is a team—and right now we need to focus on getting these boxes out the door.”
While there were trials along the way, including a drawn-out legal battle with the College of Opticians of British Columbia over Coastal’s right to sell prescription lenses, there was no denying that demand was there for fast, home-delivered, well-priced contacts. For the first five years, Coastal Contacts grew at a compound annual rate of 92 per cent. In 2004, the company raised almost $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 multiple 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 biggest move yet with a decision to manufacture 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 million 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 service 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.”
Sean Clark, who began his career as an intern at Coastal, went on to launch Shoeme with Hardy's help
In 2010, in what Hardy would undoubtedly see as another moment of serendipity, a then-30-year-old named Sean Clark challenged Hardy to a squash match at the Jericho Tennis Club. Clark had spent his 20s travelling and bartending (“It was a degree in international relationships,” 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 internship. 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 bartending 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-growing 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 be partners and invested $5,000 for Clark to investigate the idea. The two went door-to-door at Coastal’s C-suite offices with their pitch; eight people on the management team put in $50,000 each. “That was cool,” says Hardy. “That shows you the camaraderie and belief that people had in Sean’s ability.” Clark sold all his Coastal shares to fund Shoeme and started the hard work: living in his parents’ basement in Dunbar, he set up the website, travelled to shoe shows, established relationships and packed and shipped boxes. He launched the site in January 2012, and in the first year reached $1 million in sales.
It was not easy. Clark calls Hardy an unrelenting boss, whose style seems anything but “serendipitous.” Now he considers Hardy a good friend, but then it was clear that business was business. Hardy gave him sales targets that he had to meet in order to get the next instalment of cash, and frequently he was close to missing them. “It was very stressful,” says Clark. “On my second wedding anniversary dinner, I spent the entire time emailing back and forth with him because a major issue had to be dealt with. He works 24/7.”
By August 2013, sales at Shoeme had dropped well below costs. Clark’s credit cards were getting declined, his suppliers were sending threatening letters, a board member quit, and a mentor told him it was time to close up. He recalls in vivid detail a hot summer evening when he met Hardy at the Coastal office. “I’ll never forget,” Clark says. “It was Roger and me. I said, ‘So we’re done?’ He just looked at me and said, ‘Of course not.’” The next month, sales rocketed; by the end of year two, sales totalled $5 million. “He not only sees the future,” says Clark, “but he has the ability to will it into existence.”
In the fall of 2013, soon after Coastal Contacts had opened nine retail stores in Canada and Sweden, the president of Paris-based Essilor flew to Vancouver and delivered an offer on Hardy’s desk to buy the company—something in the order of $200 million. Hardy had received offers for the company since the early days, and he knew what to say: “I’m disappointed. I think it needs to be a lot higher.” By February 2014, after months of negotiation, a deal was reached and passed unanimously by the Coastal board: $435 million. Essilor clearly believed in the company’s potential; Coastal’s 2013 sales totaled $217 million, and it had become the world’s largest online retailer of contact lenses and eyewear. “People were like, ‘How do you sell your baby?’” says Hardy. “Well, it was a baby, but then it was an adolescent and a young adult, and when you have a team that’s able to run it themselves, that’s when it’s not your baby anymore. It’s kind of launched from the nest.” (In May of this year, the company’s new CEO, Roy Hessel, announced a rebranding. “Contacts” would be dropped from the name, and Clearly’s new strategy would aim at a more upscale market with pricier lens technologies.)
Several years earlier, Coastal had set up an employee share ownership plan (ESOP) in which the company matched an employee’s purchase of shares. Ninety-two per cent of eligible employees—those who had worked there for six months—had enrolled. Even those making $14 an hour in the warehouse, a board member says, were able to cash out with $50,000 when the company sold. “I don’t necessarily understand people who always own 100 per cent of the things they’re in,” says Hardy. “The first time I sold the company it was great for me but no one else. [This time] I liked the fact that we had an ESOP and we could get them all on board.”
Coastal was gone, but definitely not forgotten. Hardy remembers the early days of going to the bank every day with invoices to pay. Fast-growing businesses need capital, so through Hardy Capital Corporation, Hardy now invests in young businesses—between two and three years old—that are growing more than 100 per cent annually, with $10 million to $20 million in sales. Those numbers tell him the market’s big and receptive, and by then he can see how the management team is doing. It’s also a good time for the kind of advice he got early in his career, from people like Stuart Belkin (CEO of Belkorp Industries Inc.) and Jeffrey Mason (former CFO of Hunter Dickinson). He generally invests between $500,000 and $5 million, although so far he has contributed $10 million to Shoeme’s parent company. Two of his more recent investments include Mogo, a “socially responsible” personal lending company, and Payfirma, a platform for online and in-store transactions.
After selling Coastal, Hardy turned more of his attention to Shoeme. In July 2014, Hardy Capital acquired the Seattle-based OnlineShoes.com, and in December picked up the St. Louis-based Brown Shoe Co.’s online division, Shoes.com. These two, along with Shoeme, operate as separate entities under Shoes.com Technologies, of which Hardy is CEO. Clark is chief revenue officer, responsible for driving growth throughout the organization, and runs the Seattle office.
This year Hardy estimates the combined entity will net $265 million in sales. The sites follow the Coastal model of customer service, offering more selection than any physical store, free shipping and free returns. In Toronto, where one of Shoeme’s warehouses is located, customers are now getting same-day delivery. Shoeme also features its own brand, called Pika, which offers trendy items like vintage backpacks and cork-bed shoes at attractive prices.
Hardy has plans to open retail shoe stores soon—following the Coastal path of online to bricks-and-mortar. But it will be something quite different. He likes the idea of changing the entire stock every week. Commerce now is omnichannel: in store, at home, on mobile. Retail, he says, is going beyond the traditional store, which measures itself strictly in sales. He points a few miles north to Venice Beach’s Abbot Kinney Boulevard, which calls itself “the coolest block in America.” The precious little shops and restaurants in renovated beach houses include Toms, whose canvas shoes with braided cord sole are ubiquitous on the sidewalks outside. Inside the store, however, the shoes are hard to find. It seems like your local coffee shop, selling espresso and magazines, with nonchalantly beautiful people chatting in groups or poking at their laptops. It’s only on the store’s back patio, near a turf area where children are playing, that a shopper finds a tent with all the shoes. The brand, apparently, is not what you wear but who you are.
When Hardy talks about his growing shoe empire, I’m reminded of Jeffrey Mason’s comments. The former Coastal board member says he first thought that Hardy’s management style was too detailed; he knew exactly what the shipping clerk or the receptionist was doing. “When I first went in I said, ‘You’ve got to step back. You need people to do their jobs and you focus on the value added.’ But I think he feels compelled to understand how all the pieces fit together. I think some CEOs, they become disconnected. It’s like a layer with the firm below, and they spearhead things and information goes back and forth. I think the modern firm is more flat and more connected. He really sees both the forest and the trees.”
As we’re talking, Hardy keeps glancing out the window to see his wife, Jenny, whom he met when she was communications manager at Coastal, and their two blond children playing on the beach. But he gets excited about the conversation when he talks about how the three shoe sites can improve. One area needs work: 20 per cent of shoes are returned. I see what Mason means about the forest and the trees: when Hardy talks about overall sales, he talks about the individual customer. That’s me. “With the amount of data we have about you, you should never have to return,” he says. “My view is that there’s been no innovation in this category for seven years. We will hyper-invest to make sure we have a collection that is better than everybody else’s for you. I’m going to show you the 12 shoes, based on 3,000 other people just like you who also ordered pairs just like you. I will curate a collection that’s guaranteed to fit. It’s more than just fit. Fit is phase one. Love is phase two.”
I’m getting excited too, picturing my ideal collection of 12 shoes, curated just for me by Roger Hardy. I confess to him that just last week, I bought a pair of red leather sneakers on Shoeme. He leans over to admire them and guesses at the brand. “See? Out of all this,” he says, “a sale.”