How Casper makes money by making you sleep better?

Buying a mattress sucks. The salesmen talk fast, the choices (Tempur-Pedic? Visco-elastic memory foam? PrimaCool gel?) are overwhelming, and the prices are hefty. Yet everyone needs a mattress, meaning the $14 billion industry was ripe for reinventing. Enter Casper, the online bed-in-a-box maker that launched in April 2014. The concept was simple: Produce the best mattress possible at an affordable price, sell a single model, and deliver it quickly, for free, with a 100-day trial period. It worked: Casper had sales of $1 million in its first month. The New York City company has since raised $70 million in venture capital, grown to 120 employees, and hit $100 million in cumulative sales.

Last summer, Casper—the New York–based mattress company that aims, as its founders say, to become the Nike of sleep—introduced a surprising new product. It was only Casper’s fourth major launch, after its high-tech foam mattress (which debuted in 2014) and extra-breathable sheets and pillow (2015), but it differed from those products in a major way. This one, it turned out, wasn’t meant for humans.

The Casper Dog Mattress, which sells for $125, promises “to create a sleep environment that caters to canines’ natural behaviors.” An R&D team spent 11 months conducting dog sleep studies, consulting with canine psychologists and churning through more than 100 prototypes. “Which is a crazy idea,” admits Neil Parikh, one of Casper’s five cofounders and its COO. “It’s a dog bed!” The mattress (“Designed for top dogs, by top dogs”) is selling briskly. But that’s only part of the value. As Parikh puts it, it’s an opportunity “to [show] people how we think—to remind them that, ‘Hey, here is a cool group of people that thinks in an interesting way.’ ”

If you’re going to convince consumers that sleep is a pursuit as worthy of obsession as exercise or eating, you have to approach things differently. Three years after launching the original one-model-sleeps-all bed-in-a-box, Casper is combining science, design thinking, branding, and a winking sense of humor to redefine the humble mattress and its accoutrements into lifestyle statements. And its hundreds of thousands of customers are proving that being well-rested is finally getting its due. The company, which pulled in an estimated $200 million–plus in 2016 revenue (double the previous year’s), has begun expanding internationally, entering Canada, Germany, Austria, Switzerland, and the U.K., with more countries soon to follow.

When Casper launched in 2014, the founders’ confidence in the idea was based on several core insights. One, of course, is that buying a mattress is typically an awful consumer experience. Another is that the vast margins (often 100% or more) that the major manufacturers bake in created an opportunity for a nimble new player. And then there were a whole series of fundamental assumptions about consumer behavior that the company cheerfully upended, from the idea that people want a mattress designed for their specific sleep style to the perception that word-of-mouth sales would be impossible to generate because nobody talks about their mattress

The mattress startup keeps things light-hearted and quirky in the bedroom. That last idea became a kind of umbrella insight—that sleep is becoming a thing, a major lifestyle component, with a new cohort of evangelists proselytizing that the key to productivity and overall health stems from maximizing the quality of our slumber. That thinking runs through all of Casper’s subsequent products. Its sheets, for example, challenge the assumption that higher thread count equals higher quality. From both human testing and material-science research, Chapin’s team concluded that densely woven sheets don’t allow for cooling airflow, making the microclimate under the covers uncomfortably hot and humid. “The mattress, sheets, and pillow are fundamentally very simple things, so the science around the materials is really critical for how well they work,” says Chapin. “We’ve gotten really good at understanding things like pressure distribution and heat and moisture management.” Chapin and friends are now building out an R&D lab in San Francisco, which will allow for rapid prototyping and even in-house sleep-study bedrooms. Each space can be adjusted to mimic any possible sleep environment in terms of temperature, humidity, and other parameters. “It’s sick,” says Parikh. “[We’re] gonna be able to prototype something, then watch people actually sleeping on it, while our team is at work upstairs.”

The art is how Casper has prioritized this science while cultivating its playful image. If Wes Anderson made a movie about a mattress company, it would probably look a lot like Casper—and not just because they’ve conducted sleep studies with dogs. It’s also about the way the marketing is built around meme-y blue-and-white cartoons designed to get people—even if they’re years away from needing new bedding—thinking about the brand. Or the company’s tastefully cheeky nods to the way the mattress, via its springy latex layer, can enhance “indoor sports.”

Casper has maintained this puckishness as it moves into physical retail. It’s a dramatic shift for the company, opening it up to more traditional customers who might not feel comfortable making a major purchase online. (A queen-size mattress costs $950.) The company’s showrooms, currently in New York, Los Angeles, and London, feature elements one would never find in a Mattress King, including trompe l’oeil paintings of furniture and secret napping spaces in back. In addition, Casper struck a major partnership with the furniture retailer West Elm, which allows customers to check out the mattresses in person at more than 90 stores across North America.

Is physical retail in trouble? Not according to Casper, moving online to offline, selling mattresses and being very very profitable. Sleep tight and bring some innovation to bedtime.

Read some posts on innovation before you snooze.

How can we increase partnerships?

Is the startup bubble going to burst?

Is this an innovation?


Or listen to some music. A cover by Mehr and Rene


Interesting reads:

http://blog.casper.com/most-innovative/

https://www.inc.com/magazine/201603/liz-welch/casper-changing-mattress-industry.html

https://www.fastcompany.com/3067484/how-cult-mattress-company-casper-plans-to-get-you-into-bed

http://www.chicagotribune.com/business/success/fastcompany/tca-what-the-most-innovative-companies-can-teach-others-20170223-story.html

https://www.freeenterprise.com/would-you-sleep-on-a-mattress-that-fits-in-a-box-the-size-of-a-mini-fridge/

10 thoughts on “How Casper makes money by making you sleep better?

  1. Consumers are certainly much more savvy when it comes to research online. If you build a good foundation online, with the immense quality traffic you have at your disposal that is ready to buy, then taking the business offline sounds like a doable idea. Online brand presence plays a strong role, I would guess.

    Casper is definitely one of my favorite mattress brands. After reviewing so many mattresses, you’ll find that they do an excellent job catering to all the different needs while being as transparent as they possibly can with their brand and product.

    As you mentioned, they cultivated their playful image. And have done so in an excellent way.

    Like

    1. Just whip out your mobile and do the research. More people are using their mobiles to do research online before going forth with the purchase. Once you have customers engaged with your site and brand, it is a wonderful step. Being fun and relevant. But the fact is that you still have to have a good product. Casper has made a fantastic one. They have also teamed up with a hotel brand to deck out the rooms with Casper mattresses. Talk about collaboration.

      Like

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