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How Casper Became A $1 Billion Mattress Start-Up — The Upstarts

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Published on Apr 9, 2019

"When Kylie Jenner posted about Casper I think it broke our website."

Introducing The Upstarts, a new series about the companies you love that came out of nowhere and are now everywhere.

People typically didn't get overly excited about their mattresses until Casper showed up five years ago.

Casper is the online mattress startup that launched in 2014 and quickly became a social media phenomenon, with celebrities like Kylie Jenner showing off pictures of their new mattresses on Instagram and YouTube influencers posting "unboxing" videos where they excitedly pull a new Casper mattress out of a cardboard box after it arrived on their doorsteps.

"Oh my God, when Kylie Jenner posted about Casper I think it broke our website," says Neil Parikh, one of Casper's co-founders, about Jenner's March 2015 Instagram post, which garnered more than 870,000 likes.

Today, Casper is a billion-dollar mattress company leading the charge of online retailers disrupting an industry previously dominated by companies selling mattresses out of large warehouses. Casper's sales keep growing year-to-year and the company is even rumored to be getting ready to launch an IPO.

But, before Casper launched five years ago, the company's five co-founders struggled to convince investors that an online mattress startup could be the next big idea.

But Parikh and his fellow co-founders (including the CEO, Philip Krim, along with T. Luke Sherwin, Jeff Chapin and Gabriel Flateman) were convinced that they could help revolutionize the nearly $39 billion global mattress industry by designing a high-quality, custom multi-layer foam mattress that could be squeezed into a three-and-a-half foot-tall box and shipped across North America. (Casper mattresses start at $350 and go as high as $2,750, and you can try them out with a free, 100-day trial.)

Without any significant outside investments, Casper's founders first had to put up their own money and when that ran out use their own credit cards to pay for the most basic start-up costs, including manufacturing the first sample mattresses and paying to ship them to prospective investors.

"We were just, like, racking up debt. We put, like $50,000 to $100,000 on our credit cards, which probably was irresponsible. But, we were all in," Parikh tells CNBC Make It.

Casper's founders finally won over a group of venture capital investors who believed in the idea enough to give them $1.85 million in seed funding to get the idea off the ground in January 2014. The company officially launched in April 2014 and, even to the surprise of its founders, Casper sold out its entire inventory of mattresses (which, at the time, was still just 40 beds) on the first day the company's website went live.

The founders then had to scramble to fulfill those early orders. They waited for a truck full of Casper mattresses to travel from Casper's manufacturer, in Georgia, to their headquarters in New York City so they could quickly package them and ship them to customers.

Parikh and the other Casper founders had expected to sell about $1.8 million worth of mattresses in their first year, but instead they hit that number in just two months. That early success helped attract more money from big-name investors — including celebrities like Leonardo DiCaprio, Ashton Kutcher, Nas and 50 Cent — which, in turn, helped spread word about the brand.

In 2017, retail giant Target reportedly looked into buying Casper for $1 billion, but instead invested a reported $75 million in the company and started selling Casper products in its stores. Since launching, Casper has raised nearly $340 million from investors, and the company is currently valued at $1.1 billion, Casper said last month.

In 2018, Casper topped $400 million in annual revenue, the company says. That number is likely to continue growing in 2019, which could also be the first year that Casper reaches profitability, as the costs of growing the startup have reportedly outweighed its increasing revenue streams.

Meanwhile, Casper's success has helped spawn a king-sized list of rivals, like Leesa Sleep and Purple Innovation, as well as fellow direct-to-consumer brands like Tuft & Needle and Eight Sleep.

Read more about the rise of Casper here: https://cnb.cx/2IhtWWm

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How Casper’s founders went from $100,000 in debt to building a billion-dollar mattress start-up | CNBC Make It.

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