THE NIKE OF SLEEP
This morning Fortune published my latest (and sadly, my last!) magazine feature story. It’s a profile of mattress startup Casper and its CEO Philip Krim, who ranked #28 on our 40 under 40 list.
What I find most fascinating about Casper is its brand. The company took a boring category – mattresses – and managed to make it cool. Now, the company’s ambitions have expanded beyond mattresses to what it’s dubbed the “sleep” category. From the article:
Casper is the latest and arguably most successful in a class of upstarts turning mundane, unloved consumer products like beds, toothbrushes, suitcases, water bottles, and vitamins into something covetable and cool. These companies have relationships with their customers that go beyond clean, welcoming webpages and cute Instagram posts. They make the shopping experience simple. They go over-the-top on customer service. And most important: They inject aspirations—the promise of some deeply meaningful purpose beyond the product itself—into the run-of-the-mill things we own.
Take Soma, a water-filter company with a mission to “hydrate the world.” Or Bouqs, an online florist founded “with the bold intention of bringing romance and delight back to what was once a noble exchange.” Or Ritual, a multivitamin startup with a mission of transparency (down to its clear pills) and the slogan, “The future of vitamins is clear.” Or, most egregiously, bkr, which markets its water bottles as beauty products. “This luminous beauty essential will motivate you to drink 10x more water, and love it (like it’s cake),” the company’s website states. Price tag for one glass bottle: $35.
It doesn’t really matter that these companies often make their products at the same factories as their uncool competitors, sometimes with barely perceptible improvements over their rivals. They’re selling something totally different. Casper’s beds aren’t just providing a place to sleep. They’re giving customers better sleep, which, the company’s website declares, is “the foundation of a great life.” And who doesn’t want a great life?
Casper “is focused on the benefit, not the feature,” says Mike Duda, founder and managing partner of Bullish, a tech accelerator and investor in Casper. “People want to buy into something better. They’re buying into a set of values.”
The promise of a great life is how Casper sold $200 million worth of mattresses, sheets, pillows, and dog beds last year, its third year in business. It has allowed the more-than-300-person company to raise $240 million in venture funding, valuing it at $750 million. (The company hasn’t said whether it’s profitable.) It earned Casper a name-check among the “risk factors” in analysts’ reports about publicly traded mattress companies like Tempur-Sealy, whose sales were 15 times that of Casper last year. It has spawned more than 100 copycat mattress startups, some of which have aped Casper’s strategies down to the exact wording of its ads. And most recently, Casper’s success enticed Target to float a $1 billion buyout offer, which the company quickly declined. “We didn’t get that far with it,” says CEO and cofounder Philip Krim. “We’re a three-year-old company, and we think we can be a lot bigger than this.” (Target opted to make an investment instead.)
When it launched in 2014, Casper called itself “the Warby Parker of mattresses,” referencing the popular direct-to-consumer eyeglasses startup. But mattresses are only a $16 billion market in the U.S. The company’s ambitions have grown. Now, Casper aspires to be “the Nike of sleep.” Krim explains that athletic gear wasn’t much of an apparel category until Nike turned sneakers into the core of a lifestyle. Lululemon did the same thing for “athleisure,” now a $78 billion market by some estimates. “We want to create sleep as a category,” Krim says. “That’s a really big opportunity.”
Read the whole thing here.
As often happens in print features, many details were left on the cutting room floor. One that might be of interest to Term Sheet readers: Casper passed on the opportunity to acquire Hello, the maker of sleep tracking hardware product Sense that shut down earlier this year. Despite its ambitions to expand into other sleep-related products, Casper wasn’t interested the tech or the product because telling someone how they slept doesn’t actually solve a problem. “You don’t need something that tell you whether you slept well or you didn’t you need products that change that,” he said.
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