Casper Disrupted the Sleep Economy; Then the Covers Came Off
The self-proclaimed “Nike of sleep” proves there’s no such thing as a $1 billion mattress company
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Casper — the original DTC darling and self-proclaimed “Nike of sleep” — is now proof that there’s no such thing as a $1 billion mattress company.
In a whirlwind two years, the mattress-in-a-box company has gone from being the lead disrupter in the ‘sleep economy’ with a value of $1.1 billion, to a sale to a private equity firm for around $300 million. To put its downfall into context, the company has been sold for less than it raised in capital ($350 million). In the deal, which is expected to be concluded in early 2022, the firm agreed to pay $6.90 per outstanding share, a nearly 90% premium on the current stock price of $3.55. In short, it could have been even more of a nightmare.
Despite its lofty dreams to “awaken the potential of a well-rested world” (giving WeWork’s “elevate the world’s consciousness” a run for its money), the company has failed to deliver. The writing was on the wall ever since it went public in 2019 with a lackluster IPO that valued the company at half of its peak valuation. For starters, it has never been profitable, losing $92 million in 2018 and over $70 million in 2019. It even warned in its S-1 filing that it wouldn’t be profitable “anytime soon,” and, true to form, those losses have continued through 2020 and 2021, compounded by supply chain issues and slowing growth. At the same time, the company has spent a huge amount on marketing and customer acquisition (we’ve all heard a Casper advert on a podcast), which totaled $114 million in 2019 — enough to keep anyone awake at night. Casper’s 100-night trial program also cost the company a small fortune — over $80 million in 2018 alone — because the mattresses cannot be reused after being returned. In 2020, Casper closed its European operations, and in the same year, it stopped selling mattresses directly to UK customers, both in a failed effort to achieve profitability.
It wasn’t just financial issues that have resulted in the fall from grace. The very product that Casper sold had an obvious problem — mattresses last a long time. The average consumer is not a hotel chain, and many will keep their mattress for…
