Casper’s mission is to improve the 26 years we each spend in bed and to brighten the days in between.
Casper is an online retailer of specialty mattresses and sleep products. The company was founded in New York in 2013 by Philip Krim, Neil Parikh, T. Luke Sherwin, Jeff Chapin, and Gabriel Flateman. The sleep surface for its core product was designed and produced in-house by a team of project engineers with experience at IDEO, the famed international design and consulting firm.
The development process for Casper’s mattress was extensive – namely because the company had high standards for the finished product. Specifically, it wanted to build a surface that possessed the four main factors impacting sleep quality: comfort (sufficient softness/cushiness), support, temperature (the ability to stay cool through the night), and durability (lasting strength).
The team spent nine months checking out 15 factories in order to evaluate the properties of over 100 foam samples. After examining over 100 configurations, it narrowed its choices down to 24 beta models for qualitative user testing. It then recruited people of all backgrounds to test the most promising prototypes. The mattresses had different constructions on each side for easy comparison.
All in all, there were 3,240 hours of testing. Through this research, the team members determined that a single, well-balanced surface could accommodate the majority of body types and sleeping positions. They developed one that combined memory, latex, and support foams, with each element chosen specifically for its properties and how it worked with the others.
Casper also put significant thought into the design of accompanying sleep products. In deciding on a sheet set, it spent 18 months checking out 10 factories on three different continents to assess hundreds of samples. For its pillows, it explored 60 different prototypes and spent 18 months testing them, eventually settling on a dual-layer pillow with a soft exterior and supportive inner core.
In 2014, Casper began seeking funding for the venture, raising $1.6 million in a round led by Lerer Ventures. In April of that year it officially launched to the public, selling $1 million worth of products within the first month. In November, it expanded its delivery operations from just the contiguous United States to Canada. In 2016 it diversified, introducing its fourth product, a mattress for dogs.
Business model of Casper
Casper has a mass market business model, with no significant differentiation between customer segments. The company targets its offering at anyone who wants a quality bed.
Casper offers four primary value propositions: innovation, cost reduction, risk reduction, and brand/status.
The company places a strong emphasis on innovation. It spent over a year developing the technology for its mattress, which consists of a layer of dunlop latex foam over a layer of pressure-relieving memory foam. It is the first mattress brand to combine the two materials. Because the latex material is breathable, its contouring to sleepers’ bodies does not lead to the overheating that an all-memory foam surface often creates. That said, it provides enough sink that users feel completely supported by the memory foam below. Lastly, its springy nature prevents the feeling of being stuck. Casper’s other sleep products are cutting-edge as well. Its sheets consist of extra-long staple Supima cotton, which results in less tearing, and its pillows have low-friction fibers, resulting in springiness.
The company reduces costs in a variety of ways. It offers a 100-night trial of its mattresses. If customers do not like it they can return it for a full refund, with company employees picking it up at no extra cost. Casper offers interest-free financing on orders so customers can easily make monthly payments. Lastly, the company’s direct sales model eliminates inflated, commission-driven prices.
The company reduces risk through high quality standards. At every stage of the development process, it has volunteers evaluate and review prototypes so it can get a sense of what the average consumer would think. In 2015 it started Casper Labs, a program through which customers can confidentially test forthcoming products. Casper promises that unlike most mattress products, its offerings do not have chemical flame retardants, relying instead on mechanical fire sock composed from silica threads. Furthermore, it uses a Greenguard-certified, water-based adhesive for foam lamination instead of solvent-based adhesives. Lastly, its base foam and memory foam are certified Certipur and its latex foam has OEKO-TEX Standard 100 certification, and thus has few VOCs.
The company has established a strong brand due to its success. From the beginning, it received funding from high-profile investors, including celebrities Leonardo DiCaprio, Tobey Maguire, Adam Levine, and Ashton Kutcher. It is one of the fastest-growing consumer brands in history, achieving $1 million in sales its first month and generating $100 million in revenues in 2015, only its second year of operation. Its core product has received critical acclaim for its comfort and sleek design. Lastly, it has won many honors, including the BIG Innovation Award (2016), recognition on the Fast Company Innovation by Design list (2015), and recognition as one of Time’s “25 Best Inventions of 2015”.
Casper’s main channel is its website. It also sells its products in the stores, catalog, and website of furniture retailer West Elm. The company promotes its offering through its social media pages, advertising, participation in conferences, and showrooms in New York City, Los Angeles, and London, where customers can test out its mattresses.
Casper’s customer relationship is primarily of a self-service nature. Customers utilize the product while having limited interaction with employees. The company’s website provides answers to frequently asked questions. That said, there is a personal assistance component in the form of phone (calling and text), e-mail, and live chat support.
Casper’s business model entails designing and developing its products for customers.
Casper’s main partners are the third-party manufacturers in Georgia and Pennsylvania that assemble and produce its products. The company forms partnerships from time-to-time to enhance service for its customers; for example, in fall 2014 it teamed with driving service Uber to offer a temporary promotion in which Uber delivered its mattresses to customers in New York City.
Casper’s main resources are its human resources, namely the product engineers that design and develop its offerings.
As a relatively new startup it has relied heavily on funding from outside parties, raising $71.2 million from 21 investors as of June 2015.
Casper has a value-driven structure, aiming to provide a premium proposition through frequent product enhancements. Its biggest cost driver is likely sales/marketing, a fixed cost. Other major drivers are in the areas of research/development and product development, both fixed costs.
Casper has one revenue stream: revenues it generates from the sale of its products. Its mattresses come in six different sizes varying in price from $500 to $950.