An Autopsy on Casper: Lessons from a DTC Failure

Why Casper bleeds cash while Purple makes money

Kevin LaBuz
Marker
Published in
7 min readDec 5, 2021

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Source: Photo by Zulian Firmansyah on Unsplash

Failure is a great teacher. In late November, mattress-in-a-box firm Casper announced that it was being taken private at a valuation roughly 25% of its last private funding round. Some lessons from Casper’s failure.

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Casper’s gross margins are a few percentage points higher than Purple’s. Higher gross margins means more capacity to invest in customer acquisition, research and development (R&D), and other growth initiatives. Additionally, Casper and Purple spend a similar amount on sales and marketing (S&M), roughly $0.30 for every $1 in revenue. So far, so good.

Source: Casper, Purple, Casper 2020 10K and Purple 2020 10K.

General and administrative (G&A) expenses are where the wheels fall off. Casper jams a lot into this bucket, including retail employees, store leases and operating costs, corporate functions like finance, HR, and IT, credit card processing fees, professional services, and R&D. Casper’s G&A is 30–35% of revenue, three times higher than Purple’s. The company makes Peloton like the Bundesbank. This is why Casper bleeds cash while Purple makes money.

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Kevin LaBuz
Marker

Head of IR & Corporate Development at 1stDibs. Previously finance at Etsy, Indeed, and internet equity research at Deutsche Bank. Find me on Twitter @kjlabuz.