CASE: E-516

DATE: 04/18/14

VISIONSPRING
My wet, clammy cotton shirt stuck to my back, beads of sweat dotted my forehead, for I had just
seen my 300th patient of the week. When we arrived, a serpentine line of 2,000 people engulfed the
school that became our makeshift eye clinic. Exhausted, I looked up from my chair and realized the
line was just as long as the day we started. It was at that moment that I realized I could be sitting
in that very chair for the rest of my life and never make a meaningful dent in the untapped need for
vision services in rural Mexico, let alone the greater reaches of the developing world.
—Jordan Kassalow, Founder and Chairman, VisionSpring, describing his 1984 trip to
Mexico to deliver eye care to the rural poor.1

In March 2014, Jordan Kassalow could not help but feel that VisionSpring, the organization he
had founded over 13 years before, was at an inflection point: after many years of patient
experimentation, VisionSpring appeared to have found two scalable business models to sell
eyeglasses to the world’s poorest customers, known as the bottom of the pyramid (BoP).2 In the
past, Kassalow had sometimes felt that he was “banging his head against the wall,”3 but he was
now slowly but surely making progress in restoring the eyesight of the estimated 700 million
people in the BoP with impaired vision (see Exhibit 1). In 2014, the organization projected it
would sell nearly 500,000 pairs of glasses to customers in the developing world (see Exhibit 2).
Though the path ahead for the organization was promising, there were both old and new challenges
to be tackled. BRAC,4 VisionSpring’s largest distribution partner, had achieved a tremendous level

1
“VisionSpring Cofounder Jordan Kassalow On Why Two Million Customers Is Not Enough,” Forbes, February 4,
2014, http://www.forbes.com/sites/skollworldforum/2014/02/04/visionspring-co-founder-jordan-kassalow-on-why-
2-million-customers-is-not-enough/ (March 1, 2014).
2
This case study uses the term “bottom of the pyramid” to refer to the 4 billion individuals who lived on less than $4
per day. For more information, see C.K. Prahalad and Stuart L. Hart, “The Fortune at the Bottom of the Pyramid,”
Strategy + Business, January 10, 2002, http://www.strategy-business.com/article/11518 (April 16, 2014).
3
Interview with Jordan Kassalow, February 6, 2014. Subsequent quotations are from the author’s interviews unless
otherwise noted.
4
BRAC was formerly known as the Bangladesh Rural Advancement Committee. BRAC currently does not represent
an acronym.
Yin Li (MBA 2013) and Lecturer Laura Hattendorf prepared this case as the basis for class discussion rather than to
illustrate either effective or ineffective handling of an administrative situation.

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VisionSpring E-516 p. 2

of reach—104,000 pairs of glasses sold in 2013— and continued to require a financial subsidy.
VisionSpring had a bold plan to expand its partnership with BRAC that, if successful, could
quadruple the pairs of glasses sold through BRAC by 2018 and make this channel financially
sustainable.

Meanwhile, in El Salvador, VisionSpring had found another promising model by building its own
optical shops, which Kassalow termed BoPtical shops. Each shop was staffed with an optometrist
who could provide prescription glasses to customers and also employed trained local women to
reach the rural population in nearby areas. The unit economics of the first five stores appeared to
be attractive and scalable. However, both VisionSpring and its investors had questioned whether
this model stayed true to the company’s mission of reaching BoP customers. VisionSpring had
recently launched a customer survey program to better understand its customers’ socioeconomic
status.

In India, where 150 million of VisionSpring’s 700 million target customers resided, the
organization was still in the process of finding a sustainable go-to-market strategy. India was one
of the markets where VisionSpring had tested its initial Vision Entrepreneur “1.0” model, which
had proven to be not financially sustainable. Subsequently, the company had also tried selling
glasses using a fleet of vans operated by full-time employees, but that strategy had also failed to
generate sufficient cash flow to cover operating expenses. Most recently, VisionSpring had tried
to import its “hub and spoke” model, first developed in El Salvador, to India. Kassalow was
cautiously optimistic that VisionSpring had found a blend of strategies, including both partners
and storefronts, which would finally allow the organization to sustainably serve Indian customers.

Kevin Hassey, VisionSpring’s chief executive officer, stated that he was “pleased but impatient”
with the organization’s progress. Hassey was mindful that the 500,000 pairs of glasses
VisionSpring was projected to sell in 2014 would only reach a tiny fraction of the 700 million BoP
customers worldwide. A recent academic study had suggested that it would take an investment of
$28 billion in order to provide eye care and corrective lenses to all of the target population.5
Hassey was convinced that these customers could be served at a much lower cost and was spending
a great deal of his time on how to scale the company’s existing models as well as uncovering
potential new models. For example, could the models developed by VisionSpring prove that there
was indeed a “fortune at the bottom of the pyramid”? VisionSpring leadership believed that such
proof was necessary to attract large multinational optical companies into these frontier markets. It
believed that in order to tackle a problem of this depth and breath, only market-based models could
be scaled to make a sizeable dent in the problem. VisionSpring saw itself playing the role of a
catalyst in finding these models and communicating them to other market players. In some of its
more successful markets, having completed its mission of addressing the market failure,
VisionSpring was just starting to figure out what for-profit players needed to be convinced that
these were attractive business opportunities.

5
T.R. Fricke, B.A. Holden, D.A. Wilson, G. Schlenther, K.S. Naidoo, S. Resnikoff, and K.D. Frick, “Global Cost of
Correcting Vision Impairment From Uncorrected Refractive Error,” Bulletin of the World Health Organization, July
12 2012, http://www.who.int/bulletin/volumes/90/10/12-104034/en/ (March 17, 2014).
VisionSpring E-516 p. 3

JORDAN KASSALOW

Jordan Kassalow grew up in the suburbs of New York City, where his father was an optometrist
with a successful private practice. As a child, Kassalow loved solving difficult puzzles. In 1984,
Kassalow followed his father’s footsteps and enrolled in the New England College of Optometry.
As a student, Kassalow participated in trips organized by Volunteer Optometric Services To
Humanity (VOSH), an organization that set up weeklong eye clinics in developing countries.
Staffed by optometrists and students of optometry from the developed world, these clinics
delivered eye care and distributed donated eyeglasses in impoverished locations where these
services were not available.

These trips to the developing world impacted Kassalow in two powerful ways. The trips gave
Kassalow the inspiration to devote the bulk of his career to a social mission. Kassalow recalled:

My heart was profoundly moved as a young student when I met a seven-year-old

boy who was thought to be blind. He turned out not to be blind, and I was the lucky
person that put the glasses on his face for the first time and saw him transform into
a sighted person. That moment really gave me a deep sense of purpose and moved
my heart in a way that it became my ongoing motive for action.

The VOSH clinics also cultivated Kassalow’s interest in public health and fueled the long journey
of searching for scalable ways to restore vision to BoP customers. Notwithstanding the powerful
experiences he had at the VOSH clinics, Kassalow realized that these trips were limited in impact.
Thousands lined up to be seen by an optometrist during these clinics, but they were nevertheless
just a drop in the bucket of all those that needed eye care.

Moreover, of the estimated 700 million people in the BoP that needed eyeglasses, greater than
50 percent suffered from presbyopia, a condition of diminished ability to focus on near objects.
Presbyopia affected humans as they aged, and in the developed world was corrected by a pair of
over-the-counter reading glasses that could be purchased cheaply at the corner drug store. On the
VOSH trips, however, over 30 percent of the doctors’ time was spent diagnosing presbyopia and
distributing reading glasses. Kassalow believed that there could be a more efficient way to get
reading glasses to this population without requiring the precious time of optometrists that had
traveled around the world.

Following his graduation from the New England College of Optometry in 1988, Kassalow spent
about a year at the Aravind Eye Hospital in Tamil Nadu, India. Aravind provided all types of eye
care, but its primary work was to treat blindness resulting from cataracts, usually with surgery.
Kassalow was again reminded of the much larger population that could benefit from a much
simpler and cheaper intervention: a pair of reading glasses. Kassalow commented:

In my work at Aravind, I saw once again that even for every person who had
cataract blindness, there were 10 or 20 who were blind or very visually impaired
because they simply didn’t have glasses.

Aravind was also an organization that was blending the clinical work of treating patients with
advancing public health, “the science and art of preventing disease, prolonging life and promoting
VisionSpring E-516 p. 4

health through the organized efforts and informed choices of society, organizations, public and
private, communities and individuals."6 For example, Aravind held eye camps to raise awareness
in Indian villages that cataract-related vision loss could be corrected by surgery, an approach that
VisionSpring would later adapt for presbyopia. The experience at Aravind led Kassalow to mix
clinical and public health work in his career, with each informing and motivating the other.

After his experience at Aravind, Kassalow enrolled in a Masters in Public Health program at Johns
Hopkins University, and completed a Fellowship in Preventive Ophthalmology. This dual track
enabled him to study how public health techniques could be applied to the leading causes of
blindness in the world.

Helen Keller International

After receiving his Masters in Public Health degree, Kassalow joined both his family’s practice in
New York City and Helen Keller International, a non-profit organization focused on preventing
blindness and reducing malnutrition worldwide.

At Helen Keller, Kassalow worked on the prevention of onchocerciasis, commonly known as river
blindness. River blindness afflicted an estimated 18 million people, with many more at risk of
infection. Rates of infection were highest in West and Central Africa, the Middle East and Central
and South America.7 River blindness is caused by a parasite, but can be easily prevented by an
annual dose of the drug Mectizan. Merck, the developer of Mectizan, decided in 1987 to donate
the drug to developing countries.8

Helen Keller was part of the ecosystem of non-governmental organizations (NGOs), government
agencies, and multilateral organizations that worked to distribute Mectizan. The distribution of
Mectizan was an experience that introduced Kassalow to the challenges of getting products to
people living in the most rural and impoverished areas of the world. Helen Keller started by
mapping the locations in Africa where the disease was most endemic. Then it trained local people,
known as community-based distributors, to build awareness for the drug and actually get the pill
into the mouths of those who needed it.

Although the distribution of Mectizan was considered a success—river blindness was ultimately
eliminated as a severe public health threat in many parts of the world9—Kassalow was frustrated
by the lack of a sustainable business model. Kassalow commented:

The volunteers were every bit as poor as everybody else in their communities, and
poor people often live close to the bone and don’t have a tremendous amount of

6
http://en.wikipedia.org/wiki/Public_health
7
“Merck Offers Free Distribution of New River Blindness Drug,” The New York Times, October 22, 1987,
http://www.nytimes.com/1987/10/22/world/merck-offers-free-distribution-of-new-river-blindness-drug.html
(February 14, 2014).

8
Ibid.
9
Jason Silverstein, “Treating the Village to Cure the Disease,” The New York Times, November 6, 2013,
http://opinionator.blogs.nytimes.com/2013/11/06/treating-the-village-to-cure-the-villagers/?_r=0 (March 1, 2014).
VisionSpring E-516 p. 5

time to be involved with social services. And so we found that a lot of times the
community health worker would do it for a year and then they would stop, and so
we would expend a lot of time and effort training new people.

That’s when I thought if we had given them an incentive and they were able to
make a little bit of money for their time, that we could have more success. I was
always perplexed by how the Mectizan program could be deemed sustainable if
there wasn’t a revenue model associated with it. It was only sustainable in the sense
that it received continuing support from a large ecosystem of funders and
governments. But I always thought in order for something to really be sustainable,
you needed to have a business model associated with it.

VISIONSPRING 1.0: THE VISION ENTREPRENEUR MODEL (2003 TO 2008)

While working at Helen Keller, Kassalow spent about three months a year in Africa. During these
periods, he gained more insight into the needs of the BoP population and began to link those needs
with other observations from his work. Kassalow commented:

I had an “aha” moment when I was speaking with a local woman in Cameroon. I
was always talking to people in Africa, and I would always ask them the same
question, and that is, what are your most fundamental needs? And there was always
that list: better education for my kids, better health and cleaner water, better
agricultural products, and better roofing for my house. I remember the moment
clearly, because this woman looked at me and said we just need opportunity. She
said that’s what we really need because when we have opportunity we can be self-
reliant and when we’re self-reliant we can get all the other things on our list.

Kassalow began to connect restoring vision with increasing opportunity. At the time, studies had
been conducted connecting declining economic productivity with cataract-related vision loss. The
fact that loss of vision led to loss of productivity and livelihood was an obvious conclusion to
Kassalow. He had heard first hand from many of the people he treated in Latin America and Africa
that they could no longer work because of degenerating eyesight.

In 1998, Kassalow left Helen Keller to serve as a Senior Fellow for Global Health at the Council
for Foreign Relations (CFR), a public policy think tank. Kasslow saw working at CFR as an
opportunity to help insert health issues into the U.S. foreign policy agenda. After five years at
CFR, however, Kassalow was eager to roll up his sleeves and get back to the front lines of creating
impact. Throughout his time at CFR, he remembered how a simple pair of reading glasses could
help increase the productivity of a skilled weaver, tailor, or artisan and could double their
livelihood. He kept thinking, “What a pathetic state of affairs when millions of people were losing
livelihoods because of the lack of a pair of eyeglasses that I could source from China for less than
$1.”

These thoughts finally led Kassalow to develop a business plan for an enterprise that would train
local women from the BoP to diagnose presbyopia and sell reading glasses within their
communities. Kassalow commented:
VisionSpring E-516 p. 6

I started to develop my idea that lead to VisionSpring. I thought well, there’s lots
of people who can’t see to work and that’s taking away their opportunity. There
are also lots of people who are under- or unemployed who are searching for
opportunity. We could train these people to start small businesses selling the simple
glasses to the people who needed them to continue their livelihoods, and that way
we could sustain and create livelihoods through the sale of a very simple health
product.

Kassalow left CFR and founded VisionSpring, a non-profit organization, based on this model. In
the first few years of the organization’s existence, Kassalow tested the model in two locations—
Hyderabad, India, and Santa Ana, El Salvador.

VisionSpring started by recruiting and training local women, the majority of which did not have
formal employment experience, to sell reading glasses to their communities. Vision Entrepreneurs
(VEs), as these women were called, earned a commission from each sale and were expected to
build a small reading glasses business from which they could earn a living.

Each VE started with a three-day training period and a backpack, called a Business-in-a-Bag,
which contained the starting inventory and other supplies. VEs spent about a quarter of the training
period learning how to do the simple exam used to diagnose presbyopia with tools that were
provided in the backpack, including vision screening charts, newspapers, and a needle and thread.
Presbyopia is simple to diagnose: if someone over the age of 35 can see well in the distance, but
not up close, presbyopia is the only possible diagnosis. VEs were trained to refer anyone whose
vision was otherwise impaired to partner optical shops or clinics. VEs spent the remaining training
time learning how to run a small business, including building awareness, marketing, and managing
money and inventory.

Initially, VEs financed their training and the purchase of the Business-in-a-Bags with loans of
approximately $70 received through microfinance organizations that VisionSpring had partnered
with. Under this model, VEs bore a high level of start-up risk, and few BoP women were willing
to make the investment. New Development Solutions, a consulting firm providing services to
social enterprises, later helped VisionSpring make the switch to a micro-consignment model
(MCM), which transferred more of the start-up risk to VisionSpring. Under the MCM,
VisionSpring provided starting inventory to VEs upfront and were paid back for the cost-of-goods
after each sale. VisionSpring was able to significantly grow its base of VEs using the MCM
model—by 2007 VisionSpring had 121 active VEs in India and El Salvador.

STRUGGLING TO REACH SUSTAINABILITY

Kassalow envisioned that after an initial ramping period, the 1.0 model would be cash flow positive
and would not require donor subsidies. It turned out that getting to break-even point was more
difficult than he had anticipated.

Specifically, the challenge was getting VEs to sell enough glasses in order to cover the
organization’s channel management expenses. Vision Spring generated approximately $3 of
revenue per pair of glasses (net of commission). The cost of goods (including manufacturing the
glasses in China and transporting them to local warehouses) was approximately $1.50 per pair.
VisionSpring E-516 p. 7

Although VisionSpring generated gross margins in the 50 percent range, it had significant channel
management expenses to cover, including the cost of local staff who were responsible for
recruiting and managing the VEs. Based on the company’s analysis, in order for the model to
cover its channel management expenses, each VE had to sell approximately 18 to 20 pairs of
glasses per month. However, in 2007, each VE sold on average 10 pairs of glasses per month.

Initial performance of VEs tended to be promising, with VEs selling on average five to 15 pairs of
glasses in their first month. Over the next six months, performance would continue to improve,
with many reaching a rate of 15 to 25 pairs per month. However, a worrying trend occurred after
the first six months. Having exhausted the low-lying fruit, the productivity of each VE tended to
plateau, then decline down to single digit monthly sales.

Low Awareness and High Cultural Barriers

VisionSpring attributed the challenges VEs faced to several factors. Importantly, although
improved vision could raise productivity and income, demand for eyeglasses was latent. The first
was awareness: customers often did not grasp how their lives could change with reading glasses.
Unlike river blindness, an agonizingly painful condition, vision loss’s impacts were less visceral
and contributed to low awareness. Kassalow commented:

River blindness is a disease that causes terrible itching and feels like a really brutal
case of poison ivy that never goes away. It’s both a skin disease and an eye disease.
Then you take the drug and after sometimes many, many years of itching every day,
within 24 to 48 hours, the itching goes away. And so it’s like a miracle for people.
That helped with the tremendous spread of awareness by word of mouth, because
the disease was so brutal. With vision loss, although you can’t see, it’s not painful
and it happens slowly, and people are often not aware of it and the potential
solutions.

Overcoming the low awareness was difficult, especially because VEs typically did not have an
existing level of credibility within their communities. Many customers did not know why they
should trust VEs and had a “one day you are my neighbor and next day you are an eye doctor?”
reaction to them. The VE’s lack of credibility, coupled with the fact that they were selling a new
product, in a new setting (door to door visits) made it very difficult to persuade customers to buy
the glasses.

Cultural factors also played a strong role. In India, up to 70 percent of women of marriageable
age believed that their marriage prospects would be dimmed if they wore glasses. Women who
wore glasses feared being perceived to have genetic or physical deficits. In El Salvador, older
community members perceived younger individuals who wore glasses as “upstarts” with a
negative connotation. Those who were interested in eyeglasses were sometimes ridiculed and
ostracized by their communities.

VisionSpring made strides in overcoming some of the awareness and cultural barriers. For
example, the company learned that VEs could hold “vision campaigns,” which were a more
effective strategy for building awareness than the initial door-to-door approach. These campaigns
were a focused marketing effort to build awareness and included activities such as passing out
VisionSpring E-516 p. 8

flyers, putting on skits, and making announcements on the radio. During the campaigns, the VEs
publicized the date and location for a vision camp, a daylong event where a critical mass of people
would be tested and fitted with glasses.

Vision Entrepreneur Economics

VEs also struggled to succeed because of the economics of the 1.0 model. One of their greatest
challenges was that glasses were a “low turn” product: once customers purchased their first pair,
they might not need another pair for years. As a result, when VEs exhausted the low hanging fruit
in their communities, they had to reach customers beyond their immediate area (sometimes
requiring investment in a motorcycle for travel) or work on the more skeptical customers. Many
VEs became discouraged by the increasing effort required per sale and experienced a declining
stream of income. Since VEs worked on commission only, selling glasses was not a full-time
activity for VEs. Rather, it was one of many activities that VEs took on to support their families.
As a result, when the economics of the business became more difficult, VEs tended to reallocate
their time to other work. Approximately 70 percent of VEs turned over within 18 months of
joining, leading to high channel management expenses.

VisionSpring was able to partially address this dynamic by moving away from extremely rural
areas (villages with 500 to 1,000 residents) to higher density peri-urban areas (small towns with
100,000 to 150,000 residents). Peri-urban areas had greater concentrations of customers and
higher awareness levels, making the VEs’ jobs easier.

Additionally, while VEs were able to help about one-third of the people they screened by fitting
them with reading glasses, another third had impaired vision that required prescription eyeglasses
and another third required medical or surgical interventions. VEs had to refer two-thirds of their
potential customers to other optical shops or medical clinics which charged high prices for
prescription glasses and other services. As a result, VEs were frustrated they did not have the
products to meet the demand of more of their customers, and many were discouraged as a result
of having to send some customers away.

Lessons Learned

After several years of refining the model, the financial performance of VisionSpring remained
troubling. By 2008, Kassalow realized he needed a different model if he wanted to build a
sustainable business selling glasses to the BoP. Kassalow commented:

I was under the delusion that once that product got out into these populations it
would become viral and it would spread, like cell phones and mobile banking. I
thought we would be riding a wild horse trying to figure out how to keep up with
the demand rather than hitting our heads against the wall for all these years trying
to create the demand.

Although the 1.0 model did not prove to be fruitful, the organization nonetheless learned some
valuable lessons from the experience:
VisionSpring E-516 p. 9

 BoP customers had very low awareness for eyeglasses.

 There were strong cultural biases against wearing eyeglasses.
 The VEs often did not have enough credibility to overcome low awareness and
cultural biases.
 It was very time consuming and expensive to reach rural and low-density areas.
 It was very difficult to be a one-product company as VEs tended to shift their
attention away from selling the one product (when cost of sales increased) to other
activities that produced a higher financial return for their time.
 Some VEs were discouraged by the fact that they were not able to provide tangible
solutions to all individuals that they screened.

Professionalization

The recognition of the limitations of the 1.0 model led VisionSpring to undergo a period of
introspection from 2008 to 2010. First, Kassalow came to believe that in order for VisionSpring
to become sustainable, it would need to be staffed with talent from the business world. Kassalow
commented:

For the first five or six years of VisionSpring’s existence, the people who worked
for us were really smart recent college graduates who had no real experience
building enterprises or working in the development field or working in the social
enterprise field or working in business. They were just undergrads, smart and
hungry, who were willing to work for $25,000 to $40,000 in salary. After five or
so years, it became pretty apparent that in order to get to the next level we needed
more senior management with experience in running businesses.

In 2008, VisionSpring hired Peter Eliassen as chief operating officer. Eliassen had spent much of
his career on social causes including being in the Peace Corps in West Africa, but he also had an
MBA from the Thunderbird School of Global Management and had worked in for-profit
companies including Capital One and Unilever. In 2011, VisionSpring also hired Kevin Hassey
as chief executive officer. Hassey was an experienced eye care business executive. His experience
included serving as the vice president of marketing at Lenscrafters and the president of LCA
Vision, a large Lasik surgery company.

Social Impact Model

VisionSpring’s social impact model was also reconsidered after experiencing the challenges of the
1.0 model. Kassalow initially had two goals: improving the livelihoods of VEs by training them
to run their own businesses and improving the livelihoods of customers by restoring their vision.
Early marketing materials for VisionSpring spoke to both goals, displaying both the number of
VEs that had been employed and the number of pairs of glasses sold. While the 1.0 model had
been designed to address both goals, it had done so at a high cost and was not sustainable without
donor funds.

The two different goals suggested different strategies were necessary to move towards
sustainability. On the one hand, the best strategy for creating employment was to expand the
VisionSpring E-516 p. 10

merchandise sold by VEs into other product categories. Selling one low turn product with low
awareness was not an attractive business. Examples of products that could be added included clean
cooking stoves, light bulbs, and other products that had been designed for the BoP. On the other
hand, the best strategy for restoring vision was to develop other distribution channels for eyewear
that may or may not create employment. The company ultimately decided to focus on the latter
goal: restoring vision to the 700 million potential customers in the world. Eliassen, who had just
joined VisionSpring at the time, commented:

We chose to go deeper into vision, so it’s not about the entrepreneur. It’s not about
creating jobs. Yes, that’s a great byproduct, but it shouldn’t be the leading driver
of our work if we’re really looking to scale.

Validating Impact (2008)

About the same time that VisionSpring was contemplating its social impact model, donors were
increasingly requesting more research to validate the link between reading glasses, increased
productivity, and increased income. To Kassalow this link was obvious:

It was a common kind of issue with the foundations when we went to them to ask
for money. They would ask questions such as “How do you know that glasses
really help productivity?” or “Do glasses really help kids learn?” or “Can you share
with us the research?” I was often flippant—I would respond by saying that they
could give us a bunch of money to study it and then we’ll take two years to study it
or they could just ask everyone in their office for a day not to wear their glasses and
ask them how productive their day was.

However, Kassalow increasingly realized that an independent, rigorous academic study was
important to not only donors but also as the organization sought to engage governments and private
sector players around the need for eyeglasses. VisionSpring had to prove why it was deserving of
limited resources. Kassalow concluded that a study was necessary because “any organization
that’s using public resources to do good in the world needs to have a clear explanation of how that
money is getting spent and what the end results are.”

In 2008, VisionSpring partnered with the William Davidson Institute at the University of Michigan
to conduct a quasi-experimental study of the impact of reading glasses. The study measured
changes in productivity for both a treatment and control group. The treatment group included 254
eye camp attendees that were diagnosed with presbyopia and purchased reading glasses. The
comparison group included 206 eye camp attendees that were diagnosed with presbyopia, but did
not purchase reading glasses. While the groups were not “matched controls,” careful attention was
paid to matching buyers with non-buyers, so that the two groups were as similar as possible, and
further adjustments were made in the regression models with a rigorous set of independent
variables to statistically adjust for any possible differences between groups.

For each of these groups, the researchers collected baseline data, using a survey that followed the
World Health Organization’s protocol, for income, mental health, quality of life, and self-efficacy.
Six months later the researchers collected the same data from the same individuals and calculated
VisionSpring E-516 p. 11

the changes through statistical analysis. Their analysis showed that those who purchased reading
glasses reported a statistically significant gain in productivity.

Further statistical analysis of the data, conducted by VisionSpring, concluded that VisionSpring
customers—those that bought the glasses—had 20 percent higher monthly income growth and 34
percent higher productivity than those who did not purchase reading glasses

While cost considerations had made doing a full-scale randomized control trial prohibitive, the
study VisionSpring was able to do gave Kassalow and his staff confidence that there was a direct
link between vision, productivity, and income. The data also yielded interesting information about
the characteristics of their customers that VisionSpring would later build into marketing plans.

VISIONSPRING 2.0: THE PARTNER MODEL (2008 TO PRESENT)

VisionSpring continued to maintain its vision entrepreneur operations under the 1.0 model as a
laboratory for testing new tactics, but by 2008 it was looking for new distribution channels,
including engaging other organizations as partners. Kassalow commented:

We wondered, could we find other organizations that already have distribution

networks of people who are not only already in the field selling products, but selling
a basket of products? Could our product be added into their baskets as another bow
in the quiver? We started to think about that as a new way to address the challenges
that we were having.

One organization identified as a potential partner was BRAC, an international development

organization based in Bangladesh. BRAC possessed an organization of over 80,000 volunteer
community health workers, known as Shasthya Shebikas (SS).10 These were local women that
BRAC had trained to be “mini pharmacies on-foot.” The SS carried a basket of basic health
products including sanitary napkins, soap, condoms, oral rehydration salts, iron pills, and clean
birthing kits. They went door to door to sell these products and earned 10 to 15 percent in
commission.11 Each SS had a territory of one village.

Kassalow pitched his idea of including reading glasses in the SSs’ baskets to Mushtaque
Chowdhury, an executive at BRAC who understood the power of eyeglasses and agreed to a trial
with 50 health workers in Bangladesh. VisionSpring sold the reading glasses to BRAC for a small
amount over cost of goods. BRAC then sold the glasses to workers with a small mark-up, and the
workers sold them to their customers with another small mark-up. Results were promising enough
that the program soon expanded to approximately 500 health workers.

BRAC also served very rural areas including villages with as few as 100 families. These were the
customers at the very bottom of the BoP that were the most expensive to distribute to. The SS
were well positioned to serve these areas with the lowest levels of awareness: the credibility that

10
Annual Report 2008, BRAC.
11
Tina Rosenberg, “What Makes Community Health Care Work?” The New York Times, February 18, 2011,
http://opinionator.blogs.nytimes.com/2011/02/18/what-makes-community-health-care-work/ (February 17, 2014).
VisionSpring E-516 p. 12

they had developed through selling other health products helped overcome low awareness and
cultural objections.

Because BRAC had already invested in infrastructure—their network of 80,000 trained health
workers—for the distribution of a basket of existing products and services, VisionSpring’s BRAC
channel management expenses were much lower in comparison to the 1.0 direct model. For
example, in 2007, VisionSpring incurred channel management expenses of approximately $70,000
in its 1.0 direct model, which at the time had 121 active VEs. In 2011, however, VisionSpring
incurred substantially less in channel management expenses for BRAC, with over 9,000 BRAC
SS distributing VisionSpring reading glasses. Based on these dramatically different cost
structures, VisionSpring estimated that it could cover the costs of distributing through BRAC at a
relatively low level of SS productivity: approximately 1.5 pairs of glasses sold per SS per month.

As a result of the success of the pilot partnership with BRAC, VisionSpring began to distribute
glasses through dozens of other organizations worldwide. In 2013, the company distributed
glasses through eight partners, though BRAC remained the organization’s largest partner by a big
margin. VisionSpring projected that all of its partners together would distribute approximately
350,000 pairs of glasses in 2014, or 70 percent of VisionSpring’s total volume.

Scale of Impact and Financial Sustainability

Though the partner channel brought VisionSpring a high level of reach and significantly lower
channel management expenses, it was not a channel that was consistently cost covered because of
the low wholesale prices that VisionSpring received (see Exhibit 3). Partners typically served
extremely poor and low awareness customers who could only afford extremely low price point
products, particularly in Bangladesh and India, two countries where VisionSpring’s research
showed that customers had a lower capacity to pay for eyeglasses than their counterparts in other
developing countries such as El Salvador or South Africa. VisionSpring’s wholesale prices to
partners were just slightly above the cost of goods in light of the end customer’s low capacity to
pay. VisionSpring’s gross margin on sales to partners was typically between 20 percent to 30
percent. Eliassen described the impact of the low margins in the partner channel:

The number that we are most focused on is 700 million—the number of people who
need and lack access to glasses. We get really excited about partners like BRAC,
organizations with large distribution infrastructure that can distribute hundreds of
thousands of eyeglasses a year. That’s a lot of people getting glasses.

However, revenue-wise, most partners are selling the glasses for between $2 and
$5 per pair, because they are selling to customers in rural areas who aren’t able to
pay more. Our challenge is how do we sustain ourselves and how do we focus on
scaling when we’re not making much margin on the partner orders? We are making
between $0.15 and $0.40 per pair of glasses sold to a partner, depending on the
price pressure of the target market. It is very challenging for VisionSpring to
become financially sustainable if the bulk of our units have low gross margins.

BRAC, a partner that had previously been able to cover allocated channel management expenses,
was negatively affected in late 2011 by a leap in the customs rate from 30 percent to 93 percent in
VisionSpring E-516 p. 13

Bangladesh that would have rendered the glasses unaffordable to its end customers if the full
increase was passed on to them. VisionSpring had a choice between discontinuing its operations
in Bangladesh or subsidizing it (at a financial loss) so BRAC could continue to reach over 100,000
target customers annually. VisionSpring decided to subsidize its BRAC-distributed glasses
because of the extraordinarily large reach of BRAC’s SS network.

Indeed, BRAC’s potential reach was so great that even with the overhang of the customs increase,
VisionSpring sought to expand the partnership: the company planned that by 2018, BRAC would
distribute 440,000 pairs of glasses annually through 35,000 trained SS in Bangladesh (see Exhibit
4). To enable the expansion, VisionSpring was supplying BRAC with the necessary working
capital to purchase inventory and fund increased partner-side channel management expenses for
the first few years of the expansion project.

In order to bring the partnership to financial sustainability, VisionSpring was working with BRAC
to build a fund in Bangladesh (through the accumulation of revenue from eyeglass sales), which
would serve as a credit line for future working capital needs and other growth-related expenses.
Once the operations had scaled sufficiently in Bangladesh, expected by 2016, the revenue from
eyeglass sales would more than cover all operational and support expenses in Bangladesh, making
the program self-sustaining. Due to the high customs rate, VisionSpring planned to continue to
subsidize the cost of eyeglasses as long as necessary. If customs rates remained high indefinitely,
VisionSpring would potentially seek domestic manufacturing capabilities within Bangladesh,
which would allow the partnership to avoid the customs charges.

Operational and Management Implications

Though the partner channel was a more cost-effective distribution method, it had operational and
management trade-offs relative to the direct 1.0 model. For example, VisionSpring relied on
partners to train health workers on how to conduct vision examinations and how to interact with
customers. Likewise, implementation of changes in sales and marketing practices and product
selection also depended on the capabilities and speed of the partners.

There was also tension between VisionSpring’s glasses and other products in the health workers’
baskets. For example, despite the existing trust between health workers and their communities,
reading glasses initially did not “fly off the shelf.” The health workers were incentivized to
prioritize items with high turns and high margins. While reading glasses had high margins, they
had low turns. Additionally, customers did not have enough awareness to ask the workers for
glasses, as they did with other more familiar products such as aspirin or condoms. To address this
problem, partner health workers were trained to execute vision campaigns instead of simply going
door to door. While the campaigns boosted awareness and increased sales, they also consumed
more of the health workers’ time relative to what other products consumed. Kassalow
characterized getting partners to allocate time and resources to eyeglasses as a balancing act:

With partners, there is always negotiation of amount of time and energy spent on
one product. Their point of view is “we want to sell your glasses but we also don’t
want it to take oxygen out of the other things in our basket and let’s be careful of
not creating a strategy that’s going to take too much of the sales force’s time.”
VisionSpring E-516 p. 14

But we have found that vision campaigns are acceptable to our partners and we’ve
figured out how to do it in a way that it doesn’t detract from (and can potentially
enhance) all the other things that they’re doing and isn’t too time intensive.

Finding Scalable Partners

VisionSpring had signed on additional partners as distributors for its eyeglasses, including Vision
for a Nation (Rwanda), Community Enterprise Solutions (Guatemala, global), and Sahaj (India),
but BRAC remained the largest and most successful partner. In 2013, despite political unrest and
natural disasters in Bangladesh, BRAC health workers sold 104,000 pairs of reading glasses, or
over 50 percent of VisionSpring’s partner units.12 The next biggest partner sold approximately
30,000 units. Excluding BRAC, VisionSpring had eight partners in 2013, with each partner selling
an average of just 7,500 pairs of glasses. Eliassen commented on VisionSpring’s need to find
high-reach partners:

Our goal is to find more BRAC-like partners, as they provide a very efficient and
scalable path to growth. We just recently created a joint expansion plan with BRAC
in 2013 where we plan to distribute over 1.5 million pairs of eyeglasses in
Bangladesh in the next five years, covering greater than 90 percent of Bangladesh’s
districts. It is hard to find organizations like BRAC that have already established
massive infrastructure and a world-class distribution network.
We have worked with numerous smaller organizations that seek to create their own
distribution channels, but have found higher rates of success with organizations that
have either established disciplined distribution channels or fixed distribution outlets
with consistent foot traffic, and that also have favorable demographics for reading
glasses in the customers they reach (high percentage of customers over 35 years of
age).

Beyond Reading Glasses

Although partners had great reach, they currently distributed only reading glasses, which could
restore the vision of 500 million of the 700 million target customers. The other 200 million
customers would require prescription glasses. VisionSpring’s executive team was contemplating
how the partner channel could be leveraged to help these customers as well. To answer this
question, they were looking to another model that the company had been incubating in El Salvador,
known as the “hub and spoke” model.

VISIONSPRING 3.0: THE HUB AND SPOKE MODEL (2010 TO PRESENT)

In El Salvador, lessons from the 1.0 model were leading the company in a different, but equally
exciting direction. In 2009, a group of VEs in El Salvador proactively hired an optometrist to
come once a month to their vision camps in order to fit customers with prescription glasses. The
demand to see the optometrist was very high, and the VEs decided to bring in the optometrist
regularly.

12
Excludes units sold through India, which the company reports separately.
VisionSpring E-516 p. 15

VisionSpring’s leaders began to think whether the VEs’ experiment could be formally adopted to
both expand VisionSpring’s scope to prescription eyewear and create a more financially sound
direct distribution model. In 2010, VisionSpring had the first trial of the “hub and spoke” model
in El Salvador. The “hub” was a VisionSpring optical shop staffed with an optometrist who could
fit customers with prescription glasses. VEs employed by VisionSpring at each store became the
“spokes.” They continued to sell reading glasses and sunglasses as they had done before through
numerous monthly vision campaigns, but they now referred customers who may require
prescription lenses to the store.

The hub and spoke model addressed the income challenge that VEs had struggled with under the
1.0 model. In the 3.0 model, VEs were full-time employees who were paid a small salary,
supplemented by three possible sources of commissions. As before, they received a commission
for selling reading glasses. For customers that needed prescription lenses, VEs sold and kept the
proceeds from a voucher for an examination by the optometrist. Finally, if the customer purchased
a pair of prescription glasses at the optical shop, VEs would also earn up to a 10 percent
commission on these purchases as well. The improved compensation package increased the
retention of VEs, but VisionSpring believed that retention also improved as a result of increased
pride from being able to offer a solution to every customer they came across, whether by a direct
sale or by a referral to the VisionSpring optical shop.

VisionSpring’s prescription glasses were well below the price of those sold by existing optical
shops. Prices for prescription lenses at the “BoPtical” shops averaged in the mid $20’s (with a
starting price point below $20), compared to $100 to $150 at existing high-end shops. In order to
offer prescription glasses at these low price points, VisionSpring worked hard with manufacturers
in China and regional suppliers to create low cost but high quality glasses. Even with very low
price points, VisionSpring achieved gross margins of approximately 60 percent on its prescription
eyewear.

Cross Subsidy

By February 2014, VisionSpring had opened five stores in El Salvador. Each had been profitable
at the unit-level for more than a year. Costs required to service customers at both the store and at
vision camps were well understood and well tested (see Exhibit 5).

However, it was important to both VisionSpring and its funders to understand whether the BoPtical
shops’ financial performance was the result of shifting focus from BoP customers to middle class
customers. In particular, the average revenue per pair of glasses being generated by the “BoPtical
shops” was over $20. The high revenue per unit could only be partly attributed to the addition of
prescription glasses (which had higher price points than reading glasses) to the product mix.

VisionSpring believed that the model was serving two separate customer demographics—price-
sensitive “rich poor” customers13 who were also previously priced out of the market and resided
in the peri-urban locations of the shops as well as BoP customers in surrounding rural areas reached

13
Rich poor customers were relatively better-off customers from within the BoP population. In El Salvador, for
example, the rich poor were customers that lived on $8 per day, compared to $2 per day for customers from the very
bottom of the BoP.
VisionSpring E-516 p. 16

by VEs—and was cross subsidizing between the two groups. The higher priced products
purchased by the rich poor customers helped cover the cost of serving the rural customers.

In 2013, VisionSpring launched a customer survey program that it hoped would reveal the
demographics of its customers, and also demonstrate the effectiveness of cross subsidization. The
company used TaroWorks, a suite of mobile technology built on the Salesforce.com platform
designed to allow organizations to survey their customers (and track other field data) in remote
areas using Android devices (phones and tablets). VisionSpring crafted a 20-question customer
survey, deployed through TaroWorks, to assess the likelihood that customers were living below
the poverty line, as well as to gather additional information about their business, such as access
and affordability. To develop the survey, VisionSpring utilized the Progress Out of Poverty
Index,14 a well-recognized and statistics-based poverty measurement tool developed by the
Grameen Foundation (see Exhibit 6). The PPI calculated the likelihood that a customer was living
below the poverty line based on answers to questions about their household, for example, “What
is the main material of your household’s exterior walls?” and “What fuel is most frequently used
for cooking in your household?”.

Analysis of 5,000 customers surveyed in 2013 confirmed VisionSpring’s hypothesis that the hub
and spoke model had two distinct customer segments. Respondents from the vision campaigns
were on average more likely to be relatively poorer than respondents from the stores. Specifically,
VisionSpring’s data showed that whereas the average El Salvadoran had a 77 percent likelihood
to live below the $2.50 poverty line, customers reached at a campaign had an 80 percent likelihood
of being below the $2.50 a day poverty line (the poverty line varies by country based on purchasing
power). In contrast, customers reached in stores had a 64 percent of living below the $2.50 a day
poverty line. The results of the TaroWorks data and analysis not only helped VisionSpring prove
its hypothesis about cross subsidy, it also helped management convey the organization’s mission
to its hub and spoke employees.

Going forward, the company was seeking to formalize this program of customer surveys. Key
questions included what benchmarks should be used to assess the proportion of “poor poor”
customers to “rich poor” customers and how would VisionSpring hold each store manager
responsible for serving a target mix of customers? Given that store managers received incentive
compensation based on the financial performance of the store and wealthier customers tended to
purchase higher margin products, how could VisionSpring ensure the integrity of the customer
survey program?

VISIONSPRING INDIA

While VisionSpring was testing the partnership channel with BRAC in Bangladesh and the hub
and spoke model in El Salvador, the company was also working to solve the puzzle of distribution
in India: Kassalow estimated that 150 to 200 million of the 700 BoP customers worldwide were
concentrated in that country. However, India was a market with unique challenges. Importantly,
India’s population was predominantly rural. Compared to El Salvador’s population, which was
25 percent rural and 75 percent urban, India’s population was the reverse at 75 percent rural and
25 percent urban. Additionally, within the peri-urban areas where VisionSpring sought to operate,

14
For additional information about the PPI, visit http://www.progressoutofpoverty.org/about-ppi.
VisionSpring E-516 p. 17

it faced significant competition from existing small-scale optical shops that offered low quality but
extremely low cost products. That Indian customers were extremely price sensitive added to the
competitive dynamics. Finally, VisionSpring’s experience and research had revealed strong
cultural biases against wearing eyeglasses.

The Van Model

In 2011 in India, VisionSpring experimented with a van-based mode of distribution. Like the
partnership and hub and spoke models, the van model in India was informed by learnings from the
1.0 model. The van model employed full-time staff, unlike the commission-only compensation
scheme in the 1.0 model, which incentivized VEs to switch to other activities when it became more
difficult to sell. The van model was also designed to allow VisionSpring to reach rural customers
more efficiently and cost-effectively. Eliassen described how the vans operated:

We would have two communications employees move from town to town on

motorcycles or in a van, just to make everyone aware of the camp scheduled for
that next day in a specific location. Then, the next day, a team of four would arrive
to conduct the vision camp while the two communications teammates would be a
day ahead at another village. In this manner, the goal was to visit each village or
town every 6 months in a 100 to 150 kilometer radius.

Initially, the model appeared to be promising—the percentage of costs being covered by revenue
was steadily rising month to month. VisionSpring was encouraged by the performance of the first
few vans and quickly expanded to 20 vans. The company’s hypothesis was that each van could
sell enough glasses to cover the cost of van operations, plus generate a small profit. The profit
pooled from a large number of vans—VisionSpring estimated 400—would be enough to cover the
channel management expenses. Upon further diligence over the next several months, however,
the company realized that the van model was only 60 percent cost-covered due to inconsistent field
performance over that period. Kevin Hassey, VisionSpring’s CEO commented:

At the beginning of my time as CEO, I actually believed the van model was a
scalable model, and even put together a very big plan to expand it to a much greater
scale. But when we really did the introspection and rigorous inspection of the
results, we ended up shutting it down.

Using the analogy of running a marathon, a scalable model is like a runner who
finishes the race in good form and is ready for the next race. The van model was
like a runner that barely made it across the finish line by doing some unusual things,
all sorts of various one-time strategies to get to the endpoint, but what they did was
not repeatable and gave a false sense of security. In the van model, people on the
ground went to extraordinary lengths to hit their sales and revenue goals, but we
found that a lot of it were things they felt they had to do to please management,
rather than repeatable strategies.

Peter Eliassen, VisionSpring’s COO added:

VisionSpring E-516 p. 18

The really rural parts of India are very hard to service. You can get teams to get in
vans and go screen and sell glasses, but it’s exhausting because it’s hot and it is
very hard work, and your vans are breaking down and the staff are away from their
families. Not many people want to do this job and so there’s high turnover. The
cost to serve is really high. It’s funny as initially you feel that you are really on to
something as there is no competition and we are consistently reaching markets that
didn’t previously have access to eyeglasses, and then after a few months you realize
how difficult it is to consistently operate in this environment…hence the lack of
competition.

Hub and Spoke in India

In 2012, the company decided to discontinue the van model on a standalone basis. However,
because the hub and spoke model was showing promise in El Salvador, VisionSpring decided to
test it in India by adapting the vans as the “spokes.”

In 2012-2013, VisionSpring opened two BoPtical shops in India, modeled after its shops in El
Salvador. However, VisionSpring soon found that the hub and spoke model, as it was practiced
in El Salvador, would be challenged to be cost-covered in India because of the unique dynamics
of the country. First, cross subsidy was not occurring as frequently in India as it was in El Salvador.
In India, the “hub” customers and the “spoke” customers were very similar in demographics with
both groups being extremely poor. In El Salvador, the company had depended on customers with
a higher capacity to pay for higher-margin premium products, but in India customers were
extremely price sensitive and even preferred to purchase lower quality, but cheaper products that
might have to be replaced sooner.

Second, VEs in El Salvador used a mix of public transportation and foot-travel to execute the
vision campaigns. In India, however, it was more costly and operationally challenging to run these
campaigns because of low population density and poor transportation infrastructure, which
necessitated the use of vans to access rural locations. Although these factors were partly offset by
the lower cost of labor and other supplies in India, VisionSpring found it was overall more difficult
to generate a return on investment on its Indian BoPtical shops, which required an initial
investment of $30,000 to build.

The company sought a lower cost version of the model that would require less capital up front and
lower ongoing operating costs. As it had done with the partner distribution channel, VisionSpring
looked for ways to leverage existing infrastructure in the market in order to lower costs. The
company found partners in the country’s eye hospitals, many of which were part of the Aravind
Eye Care System. Starting in 2012, VisionSpring opened stores embedded within these existing
eye hospitals. By the end of 2013, VisionSpring had opened 11 hospital-based “hub” locations,
each served by a van “spoke.” By early 2014, these hospital-based shops were operating close to
breakeven.

LOOKING FORWARD

As the VisionSpring executive team looked ahead, the biggest challenges remained fulfilling the
organization’s social mission and doing so in a financially sustainable manner. The 1.0 model and
VisionSpring E-516 p. 19

the van model had been discarded because of their poor financial performance, but these models
had also suffered from limited reach. BRAC was a channel that had enormous reach that the
organization was now working hard to bring into financial sustainability. If all went according to
plan with the expansion of the VisionSpring-BRAC partnership in Bangladesh, profits would be
collected over time to fund working capital needs and channel management expenses.
VisionSpring was also working to develop local manufacturing capabilities so that it could avoid
the onerous customs charges and the resulting financial subsidies.

In El Salvador, financial results of the hub and spoke model were impressive but questions had
arisen about the company’s focus on fulfilling its social mission. Although the TaroWorks data
had shown that VisionSpring was subsidizing BoP customers with sales to rich poor customers,
and over half of all customers were purchasing eyeglasses for the first time, how would the
company continue to incentivize and monitor an appropriate mix of different customer segments?
Additionally, if VisionSpring succeeded in bringing in for-profit players to scale this model, would
they be incentivized to continue the cross-subsidy work?

Scaling was yet another challenge that laid ahead. In the partner channel, VisionSpring continued
to be on the hunt for large scalable partners like BRAC. Could its work with BRAC be repeated
(and in a financially sustainable manner) and with how many partners? With the hub and spoke
channel, how should VisionSpring draw private sector players into mimicking and hopefully
scaling the approach? The company was in the process of understanding what it needed to
demonstrate in order for market forces to take over.

Kassalow, Hassey, and Eliassen were all pleased with VisionSpring’s progress. They had
developed several go-to-market models and each had its own strengths and weaknesses – some
more profitable, some reaching many more customers in their target market. The three believed
success would come from three strategies: 1) scaling proven programs like BRAC and El Salvador
in a mission conscious way; 2) radically growing next generation scaling capabilities (to 100
million customers or more) in conjunction with other like-minded organizations; 3) and freeing up
Kassalow to focus on advocacy/policy changes which could pay significant dividends for
VisionSpring and the 700 million customers objective. As they looked forward, they saw the many
challenges the organization was facing, but they were also excited by the opportunities.
VisionSpring E-516 p. 20

Exhibit 1
Excerpt from VisionSpring Website

Source: VisionSpring.
VisionSpring E-516 p. 21

Exhibit 2
VisionSpring Unit Sales 2008-2014P
(Thousands)

600

500
500

400 369 382

300
256
201 209
200

98
100

-
2008 2009 2010 2011 2012 2013 2014

Source: VisionSpring.
VisionSpring E-516 p. 22

Exhibit 3
VisionSpring Financials 2012-2013

2012 2013
1
Hub and Spoke Model
Units 43,014 75,133
Revenue per Unit $19.71 $15.70
Gross Margin Percent 55.8% 60.1%
Number of Stores 5 17

Revenue $847,984 $1,179,396

Cost of Goods $374,632 $470,890
Gross Profit $473,352 $708,506

Operating Expenses $739,069 $1,113,010

Operating Income (Loss) $(265,717) $(404,504)

Global Partnerships2
Units 325,681 308,165
Revenue per Unit $1.62 $1.34
Gross Margin Percent 24.7% 11.7%

Revenue $526,884 $414,169

Cost of Goods $396,894 $365,551
Gross Profit $129,990 $48,618

Operating Expenses $529,254 $220,965

Operating Income (Loss) $(399,264) $(172,347)

Headquarters
Operating Expenses $1,191,151 $1,285,000

VisionSpring Consolidated
Units 368,695 383,298

Revenue $1,374,868 $1,593,565

Cost of Goods $771,526 $836,441
Gross Margin $603,342 $757,124

Operating Expenses $2,459,474 $2,618,975

Operating Income (Loss) Before Contributions $(1,856,132) $(1,861,851)

¹ Includes hub and spoke operations in El Salvador and India. Operating expenses include channel management
expenses and capital expenditures associated with buildout of new stores.
² In the Global Partnerships channel, units represent a combination of glasses sold to end-customers or "glasses on
noses" and wholesale units sold to partners, depending on the availability of data by partner. However, revenue and
cost of goods continue to reflect wholesale transactions with partners and therefore are not directly comparable to
unit figures. Additionally, figures include the impact of VisionSpring's subsidy to BRAC due to high Bangladesh
customs rates.

Source: VisionSpring.
VisionSpring E-516 p. 23

Exhibit 4
VisionSpring-BRAC Partnership Expansion Plan 2014-2018

Source: VisionSpring.
VisionSpring E-516 p. 24

Exhibit 5
Pro Forma Unit-Level Monthly Profit & Loss Statement
El Salvador Hub and Spoke Model

Revenue $25,000

Units 750

Cost of Goods Sold $8,500

Gross Profit $16,500

Sales Expenses $7,500

Administration Expenses $4,000

Financial Expenses $200

Total Operating Expenses $11,700

Branch Contribution $4,800

Source: VisionSpring.
VisionSpring E-516 p. 25

Exhibit 6
Grameen Foundation / Progress Out of Poverty Index
Customer Survey Questions

Are you a man or a woman?

1

How many people in your household are 17 years of age or younger?

2

Not including bathrooms, hallways, the kitchen or the garage, how many rooms are in your house?
3

How many people in your household earn a salary?

4

Last week, did the female head of your household do any work besides household chores?
5

What is the main fuel used in your household for cooking?

6

Does your household have a refrigerator?

7

Does your household have a blender?

8

Does your household have a television and a VCR/VCD/DVD Player?

9

Does your household have a radio and stereo system?

10

Does your household have a fan?

11

Source: VisionSpring.