Casper went from a billion-dollar valuation to selling for just 30 cents on the dollar. They launched in 2014, disrupting the mattress industry with their direct-to-consumer model and popularising the “mattress in a box.” They made $1 million in their first month and hit $300 million in revenue by 2019, positioning themselves as a major DTC player. But behind the scenes, they were losing money on every sale. Venture capitalists kept funding their growth, betting on future profitability. Rising customer acquisition costs and increased competition added to their challenges, and Casper struggled to diversify beyond mattresses—a product people rarely repurchase. By the time of their IPO, they were losing around $300 per mattress. The IPO fell about 50% short of expectations, and eventually, Casper was sold for $286 million, below the total amount they’d raised. Casper’s story shows that scaling fast without a clear path to profitability can turn high growth into high risk.
Julia Kinner
1mo
Most of all it's a story about D2C unit economics and the importance of offline distribution / understanding consumer channel preferences.
Aram Attar
4w
Great case study, I’ll include it in my VC training. Two crucial lessons for Investors: 1/ Understand unit economics early. Here’s how the best do it: https://thevcfactory.com/unit-economics/ 2/ Sunk cost fallacy and its siblings, loss aversion and escalation of commitment, are your worst enemies: https://thevcfactory.com/bridge-financing-when-venture-capitalists-throw-good-money-after-bad/
Jordan Robinson
1mo
I think it could be basics: the product. I wanted to be a customer but found the product not good for my sleep and had to reluctantly return it after giving it a fair try
The D2C model is not suitable for all products. A product like bed should be distributed to the market utilizing the distributors and resellers.
David Kahn
1mo
I see this daily with too many brands, especially when they rely on in channel reporting for attribution. Their true CPAs are very different when tracked correctly
Ade Molajo
3w
30cents on the dollar? Remember when a $300m mattress company would be a success. Maybe venture is the problem.
Chace O'Neill
1mo
🤝😍
Ariful I.
1mo
Casper's story is a crucial lesson on the risks of fast growth without profitability. Thanks for sharing!
Geraldine Cortes
1mo
Casper’s story is a real cautionary tale
SWE Intern @ Digital Wildcatters | MLH Fellow @ Meta | Computer Science @ UH | Youssefaa.com
1moNo, they actually had the best outcome possible: a buyout for a ZIRP D2C company with no viable unit economics. Good for them.