Sleeping unsoundly: Mattress-in-a-box company Casper hasn't made its business model work

"Mattress-in-a-box" company Casper announced this week that it was being acquired, taking the company private less than two years after the company's IPO. The deal values Casper somewhere around $300m, way down on the frothy $1.1bn valuation from 2 years ago.

‍Sleeping unsoundly

‍Casper was one of the most successful early direct-to-consumer businesses, selling thousands of mattresses and sleep accessories since the company was founded in 2014. The product, by all accounts, was pretty good — and Casper got in front of would-be-buyers with clever subway ads, loads of podcast airtime and a lot of marketing spend.

But, as Casper scaled its revenue from tens of millions to hundreds of millions, one thing never followed: profits. Casper's filings reveal a consistent history of operating losses, with the company's generous returns policy and aggressive marketing spend both burning millions each year.

Cutting out the middleman, and going straight to the consumer, is extremely tempting. For huge brands like Nike, which everyone already knows, it makes a lot of sense. But if you need to get the word out? That's going to keep costing you. Case in point; Casper spent $157m just on sales and marketing last year, almost 32% of its revenue.