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February 14, 2020 | 4-minute read (762 words)
When sleep brand Casper launched its IPO Feb. 6, CEO Philip Krim told CNBC that “Valuations are just moments in time,” underscoring his interest in the company’s long-term goals rather than simply focusing on its IPO pricing or performance.
His ability to look at the 30,000-foot view of the business is one great takeaway from his comments following the offering. We went over the interview he gave that day and heard some great gems that can help other entrepreneurs.
1. Disrupting An Age-Old Industry Takes Innovation
When Krim met his co-founders in 2013, they realized they were all tracking their sleep. “We kept coming back to, ‘What do I do about that? How do I actually make myself sleep better?’” he said.
They then commiserated about how much they disliked the experience of buying mattresses, and started brainstorming whether there could be a better way. “And we said we could actually build a better mattress that’s universally comfortable, that can help people sleep better, and that the brands that existed didn’t mean anything to us as consumers. So the lack of innovation, the lack of focus on consumers really allowed Casper to come in and grow incredibly fast.”
After launching the business in April of 2014, the founders worked to include sleep as “part of the wellness equation, in addition to exercise and eating right,” Krim said. By thinking holistically, Casper was able to create a “a total end to end solution” in contrast to the legacy mattress companies, which he describes as “siloed.”
2. Research Investments Aren’t Cheap
Casper’s general administrative costs come in at over 30 percent of revenue, which is significantly higher than its competitors', but Krim attributes that to the firm’s commitment to innovation. “The reason why our mattress is the highest-rated mattress by Consumer Reports, the reason why our Glow Light won Time’s invention of the year, is because we invest in great products,” he said.
The company’s labs are focused on innovation, which lead to high administrative costs. He said he expects the company’s growth to offset those costs as the firm expands.
3. Brick and Mortar Is Still Very Relevant
Although many people have been speculating about the impending death of the brick and mortar store concept, Casper feels that’s not true at all. The company has 60 physical stores, allowing the firm to connect directly with consumers and to get real-time feedback.
“People spend over 20 minutes in our stores on average because you have to experience the products, it’s been great for sales.” He noted that Casper is becoming “the go-to destination to talk about sleep.”
Of course, the company also optimizes its online presence, with Krim adding that its omnichannel strategy is one of its keys to growth. “That’s what customers are asking us for. They want to have a place where they can try the mattress, they want to talk to someone. You’re spending a third of your life with our products, and we take that very seriously, so that multiple touchpoint approach has been something that’s really great.”
4. Word of Mouth is Powerful
Casper advertises in such diversified media channels as podcasts, on the subway, digitally, and otherwise. “You can’t be reliant on any one channel,” Krim said. One inexpensive marketing channel that’s really working well for the firm is word of mouth.
About 20 percent of Casper’s revenue comes from previous customers “and it’s growing really fast” because customers trust the brand, he noted.
But one thing that Krim doesn’t foresee the company doing to grow is expanding outside of the bedroom. “We’re very focused on sleep, that’s our north star. We’ve defined our vision to become the most loved and largest sleep company, we’re very mission-driven at Casper.”
5. Customer Service Is Key
Casper is doubling down on customer service with its free trial policy. “We offer a 100-night trial,” Krim said. “If you don’t love it, just call us, we’ll come pick it up.”
The reason he believes so strongly in that strategy is because lying on a mattress in a store is not necessarily indicative of whether it’s the correct mattress for a particular person. “You should sleep on it, so we came up with the 100-night trial,” he said. “It’s largely become an industry standard at this point, but that’s not how the industry worked before Casper, so again, we’re putting the customer first.”