How Casper Failed & Why DTC Startups Lose Money
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- čas přidán 14. 06. 2024
- Through 2014 to 2018, Casper was everywhere on the Internet, flooding advertisements into every trendy podcast, website, and CZcams video. Need a mattress? Want a mattress? Buy Casper. Not comfortable buying a mattress you’ve never seen or touched before? No problem! Sleep on it for three months and return it anytime for a full refund within those 100 days, no questions asked. With a radically generous return policy and aggressive multi-million advertising budgets, Casper quickly rose to fame as the flashiest and fast growing online consumer brand.
Silicon Valley fueled Casper’s meteoric rise, eager to showcase the company as a shining example of technological innovation and business transformation. Casper, Warby Parker, Dollar Shave Club were all pioneers of a new revolutionary type of business called Direct-To-Consumer.
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0:00 Direct-To-Consumer (DTC) Business Model
3:50 Turning Down A Billion Dollars
5:41 A Broken Business Model
8:40 Bursting of the DTC Bubble
11:30 Irony of Retail
Chapters:
0:00 Introduction
0:53 Direct-To-Consumer (DTC) Business Model
2:45 3 Billion in Venture Capital
3:50 Turning Down A Billion Dollars
4:30 Casper's Embarrassing IPO Debut
5:41 A Broken Business Model
7:46 Rising Costs of Online Advertising
8:40 Bursting of the DTC Bubble
10:45 Reality of Mattress Buying Habits
11:30 Irony of Retail Sales
5:21 Cringey Selfie Fail
A few
I’ve been trying to figure out the DTC model as I thought the purpose was to bring quality products at a reasonable price without the middle man markups. It seems more are doing quality just above average but for luxury prices, especially apparel & accessories. What gives? Just cashing in on a trend?
Your last statement was incorrect; Casper was taken private again.
Never understood this whole 'mattress startup' craze. 🙄
The biggest problem facing the DTC business model, it’s disingenuous. The promise of ‘cutting out the middle men’ when in reality, that’s all they are. Dollar Shave Club used rebranded Dorco Razors/MVMT with alibaba watches/ Fresh Clean Tees are rebranded next level tee shirts etc… In nearly every case, the DTC company has near zero intellectual property and exists as a trading company/marketing firm. The only thing that really gets cut out, is the engineering of a viable product and the valuable IP that comes with it. It doesn’t necessarily make the product not worth purchasing, but it does make itself non-investable.
This is so true right here. These companies think they can survive because they get a couple of dummies to fall for their marketing. But anyone who does their own research or looks into the details see that they are in fact the middle man with just a new name. The ones you named above are some of the worst offenders (and in all honesty most of the time very obviously a sham)
@@Mr.Meme01 YES ! the worst offender by far is Hubble contacts . Are we suppose to believe that two dudes can just start a contact lens company ?
The key thing is, most people don’t do research or look into anything. And companies know this. In fact many of them bank on it.
@Cade What value did you bring to the system?
@@andybaldman Money in his pockets. Obviously
I think Casper inadvertently advertised on behalf of its competitors. I don’t think customers can differentiate between these mattress companies.
I agree. When I saw the title, I thought of CZcams sponsors, but it turned out that was Purple. If I can't tell the difference, I imagine others can't either.
Excellent observation
Something I noticed when I was looking into buying one, and which I found somewhat confusing, is that many of these companies, eg Casper, Emma, Simba etc, used exactly the same website layout/template. Only logos and colours were changed, so I almost assumed initially that they were all one and the same, just with slightly modified product specs. This was a few years ago, the websites are different now (But still quite similar)
Can confirm. Saw a JRE ad for Casper, did research into DTC mattress companies, bought a purple mattress.
@@LegendaryKenneth I can actually 100% confirm some of them are the same goddamn company. We bought an idle and due to COVID related delays they sent us a Haven. Got an email saying saying they "wanted to clear up confusion about the product you may have received" cause they "teamed up with our sister company" and "the only real difference is on the label." Basically reassured us the mattress was totally identical.
Incidentally, it's an awful mattress. Don't get either brand lol
I always remember what my logistics professor told us during one of our classes: "Businesses aren't stupid. If cutting out the middlemen was profitable most businesses would already have done it. If there's a middleman, then it's probably the cheaper option."
Well that's not necessarily true. Before the Internet it was the pretty much the ONLY option. And for businesses that existed before the Internet, it's likely the easiest option because trying to set up the logistics for DTC would be a nightmare in the short-term financially and a huge risk.
@@wiley-harris-andersonYet it works well for both new compaies like Tesla or old ones like Lego.
Maybe not cheaper, but more effective. Getting in with a retailer makes the product more visible and accessible. For a major purchase like a mattress, I can see people researching companies and buying direct. Who really wants to do that though for a razor or laundry detergent?
@@wiley-harris-anderson Right
The middleman, large retail stores like Walmart, are very similar to the Apple App Store and Google Play Store. These "stores" already have a large number of users and they offer a lot of exposure with little to no cost to the app maker. Similarly, retail stores already have lots shoppers and products get a lot of exposure sitting on the shelves. I have listened to several episodes on the My First Million (MFM) Podcast, and they have had multiple episodes focused on DTC brands. It was briefly stated in this video, but the guys from the MFM podcast emphasized the importance of the multiplier on each ad dollar spent. Obviously all types of businesses want some sort of return/multiplier on the ad dollars they spend, but DTC businesses heavily rely on them. Seeing how Casper was burning money on ads with no traction, it seems that their DTC model was not viable and they had to pivot to retail.
If a company does a ton of advertising through influencer sponsorships, yet you don't know a single person who knows their products, there's a good chance it's going down in flames
“This is 21st century capitalism! It’s not about who makes the most profitable company, it’s about who makes the biggest, loss-making juggernaut, that can pick up the assets of their dead competitors!”
-Ordinary Things, ‘The E-Scooter Apocalypse’
@JJ Email Lol for real. It's an immediate red flag for almost everyone
And yet I'm still waiting for Raid Shadow Legends to die.
Hello fresh comes to mind. All CZcamsrs have a sponsorship with them but no one outside the YT realm know who they are. Like if a content creator is majority teens/early adults they’re not gonna sign up for a meal subscription plan but they don’t understand that, all they see is potential customers.
I’ve slept on a Casper mattress for 6 years… it’s actually been the best bed I’ve ever used. I really hope they figure things out and can stay afloat
Company got acquired by a PE firm for $6.90/share, valuing it at 286MM in Nov'21. So, its valuation collapsed from $1.1B, to $286MM. Key to making money is not building a cash flow positive business, but to fake your valuation sky high and get out before others. Moral of the story.
Other than all the people who lost money? Faking a valuation high only works if people buy your bullshit
True at the end of the day it’s up to the due diligence of the Buyer not to acquire a lemon, it’s not your responsibility to show them that it’s a piece of shit company.
Its okay it wasnt always like this and it obviously isnt sustainable
@@blablablaa14 yeah, that's the joke. There is a VC that is losing money on the other side of all these deals fake valuations. They nominally don't care, because they accept that they throw money at things that will fail, and make it back on the one that succeeds. But the model is unsustainable if no one is actually trying to solve problems, and instead just trying to lie to VCs to take their money.
Yeah, and on top of that, the founders and the market could have (likely would have) just blamed Target corp. for the company's failure after they had taken the original offer of $900mm. After such, they would be the darling founders of the Valley and called their shot at any role or funding... Moral is old as time. Pigs get fed, hogs get slaughtered.
I worked for GotJunk in NYC. We were contracted for Casper mattress returns.
They told us throw them all out instead of donating or take it home. Thousands of mattresses per month, in landfills for their “DTC” model 😂😂🎉
Too much liability. They are prolly full of stuff...after 100 nights
A used matress in the US literally cannot be donated or given away ever, by law. It's a huge sanitary risk: bodily fluids, bed bugs, etc.
The first ones that I encountered were the grocery ones, like Hello Fresh and Blue Apron. What really blew my mind was how expensive they were for fairly basic, simple meals that don't even make enough for leftovers. It's so easy to do the math, based on what you're paying for what you normally get at the supermarket, to determine that those guys are completely ripping people off.
Yeah that's entirely logical and true but it's betting on the fact that people are lazy and don't want to go out and purchase food, especially younger people who probably don't cook a lot at home or maybe, if you have a family and both parents are so incredibly busy it could make sense but at the end of the day it's still way to expensive for what it is and I prefer to pick my own stuff and save more.
Spot on. If you can make it yourself, why are you paying them to package the ingredients and mail them to you? But don't worry. The music is going to stop for these companies, especially with inflation and commodity prices increasing. People are going to cut discretionary spending and that stuff is purely discretionary and an unnecessary convenience.
I think what was telling here is that supermarkets got in on the meal kit band wagon and then fairly quickly exited as it Cleary wasn't a very good value proposition.
I am disabled and Hello Fresh has been a gamechanger for me! I get that this service is pricey and not for everyone, but it made cooking really accessible for me!
Fresh produce was big and bulky, and I don't drive so I had to haul all my groceries through public transport. I can't carry much weight either so it barely lasted through the week. After each trip I was in pain and too exhausted to cook anyways. Having the groceries portioned and delivered is simply amazing for me and worth the price :)
@@vacant-state Hey, more power to ya. That is a massive oversight on the part of my analysis. Sure wish it was a better deal for the sake of people like you, who depend on that kind of service existing.
I work in a grocery store and have seen more and more D to C brands coming into the shelves. Particularly the shaving companies 😬
Yep. I see Bevel, billie, joy, and whatever. I feel bad for workers who create these items & have to be laid off. 😐
@@aurora-rene4263 yep, Joy is a big one, and Harry’s
Same here, we just got Harry’s , Joy, Dollar Shave Club the other week lol
Almost as if it's creepy for companies to send you RAZORS in the mail, right to your door
@@pozloadescobar how is that creepy
Very often when I hear aggressive advertising on social media I take note to not purchase that product because it's clear that the company is investing more into advertising than the product itself.
“This is 21st century capitalism! It’s not about who makes the most profitable company, it’s about who makes the biggest, loss-making juggernaut, that can pick up the assets of their dead competitors!”
-Ordinary Things, ‘The E-Scooter Apocalypse’
Facts
Yeah, I've always found the saturation of mattress companies in America perplexing. Whether we're talking about the absurd number of physical mattress stores like Mattress Firm, or online sellers like Casper, Purple, Leesa, etc., it's like...why? As the video points out, people only buy a new mattress about once every ten years, so why are companies fighting so tooth and nail for this market?
This is one of those weird anomalies of the US capitalist system that I have never heard a good answer for. There is 0 reason for so many mattress retailers to exist (DTC or retailers) in the US. Same with car dealerships, there is very little reason to have so fucking many of them, but that has to do with the exclusive nature of dealerships and the obsession of consumers to be able to drive a brand new car off the lot same day. Either of those are true for mattress firms.....
@@ntb3884 It's about motorcycles not cars, but Fortnine did a great vid on that subject: czcams.com/video/meHYBhcpdvQ/video.html
There was a rumor going around that they were using mattress stores to launder drug money. I heard it was debunked.
i think a lot of people see the profit margin for mattresses and was surprised at how high it is
not realizing that profit margin is just half of the battle
There have been conspiracy theories floating around that the reason Mattress Firm had so many locations is because they were being used as a front for money laundering. They have a lot less locations now, but they're still all over the place and it seems like there's never a customer inside the store when I pass by one.
I've always wondered about so many mattress companies advertising on podcasts. Especially since most of the time it's the same people listening to all the episodes, and most people purchase a new mattress every 10 to 15 years at the most.
That's not entirely unreasonable... They are looking for weakly reach, since you want the person to have it in mind and also to remember the brand when they need the mattress, which could be any week
@@grigoriitimofeev5440 Think that you mean't high weekly frequency as reach is diversifying the impression pool in different channels I.e. podcasts, out of home, streaming services at hitting different target groups-- which they do as well. Working in media I'm curious to understand the weeks to conversion for this product. I think the advertising at high frequency does push those down the funnel to be in market for the product. Not sure people just think "oh I need a new mattress today."
@@praisejesusrepentorlikewis6218 "Zipporah took a flint knife, cut off her son’s foreskin and touched Moses’ feet with it."
Exodus 4:25 NIV
I mean, people don't buy new cars that often but you see more ads for cars than just about anything else.
Kinda makes sense. Assuming it's a podcast directed at people in there early 20s, recent colleg grads that are moving away from home for the first time and need a mattress. I think its a longer shot to advertise to older people who have actress they've had for a few years
I loved the “try it for 100 days” model. Laying on a mattress at a store tells me nothing. What’s comfortable for 5 minutes may not be comfortable at all for 8 hours. Case in point: I thought the Casper was super comfy when I first lay down on it but after a week of miserable, painful, “worst sleep of my life” sleep, I returned it.
most traditional matress companies (ones you buy in a store) have a 90 day return policy. Their return policy wasn't all that revolutionary.
@@HayyBooBoo4ut the video said the 100 day return policy was “over generous”
@@HayyBooBoo4I agree it was only 10 days longer, even thought the guy in the video criticized it
Most of the D2C brands end up selling through retail. D2C is just catalyst for a new brand to get the name around and test the product market fit.
This !!
EXACTLY
This guy closes chasms...
great insight
Yeah I saw function of beauty at target and I was so confused since it was a D2C company
I also think that there is some misunderstanding from tech bros. Millennials were deemed to be the retail store killers, but many of us like to try things before we buy it, we want to buy quality products that will last. Sure you can return a Casper mattress, but that's way more annoying than just buying the right mattress the first time. A mattress is a 10 year investment that affects my sleep and costs less than my cell phone. I'm going to make sure I get the right one.
Same goes for other products. I'm old fashioned maybe, but I hate buying 3 sizes of something and returning 2 that don't fit for clothes. I think people are becoming aware of the environment impacts of such policies as well.
I’m 22 and I agree
Tech bros don't understand the real world very well because they live in the silicon valley echo chamber where everything is great if it is "tech". The problem is that we reward their stupidity sometimes and then we end up where we are today - a big mess.
Word. In-store mattress hunting is fun as f**k. It also makes a fun date w a lil hottie!
I don't agree because I can buy 10 of these mattresses and return 9 with no problem. Also a lot of people moving don't want to take a new mattress with them so they just buy a new one due to cost of moving a large mattress and its much easier to have one shipped to you. Also people aren't very particular about their mattress, so almost any mattress you buy is worth it. This is especially important when a mattress in traditional stores cost so much more than what the DTC brands do. Go into any mattress retailer and the store is usually completely empty
What about used car purchases such as shift and Carvana ?
What companies fundamentally misunderstand is that online buyers are almost always buying from companies or specific products that they already use and trust. The big fad of buying everything online died out once everyone realized how easy, expensive, and frustrating it was to get scammed. Trying to create a new product online-only by its own nature will garner a lot of scrutiny and immediate distrust. Especially with that corporate art veneer that many have already come to learn is nothing more than a cheap coat of paint on a usually mediocre product.
I guess Caspers whole “we’re different” ideology didn’t pan out for them.
Returning a package is more hassle than just trying it in the store. How do you even get a mattress to fit its original packaging?
@@electric_boogaloo496 You don't, they are vacuum shrunk at the factory and no customer has that ability at home. Some cheap mattress companies will landfill the mattresses but others claim they donate them.
Teslas for one
@@electric_boogaloo496 Sometimes they literally just tell you to keep it, which people have actually caught onto and used to get free mattresses. Honestly that business model is an open invitation for the company to get scammed by consumers. Sell an item massively expensive to return-ship and then offer free return shipping.
I love seeing these companies that spend exponentially more on advertising and “hipster” marketing than their actual product go away. If only car insurance companies could do the same.
Like Quibi?
@@sulkursell9130 luckily that one died quickly. State Farm and Liberty Mutual need to stop
Please let Raycon and Ridge Wallet die soon. Please please please 🙏🥺
@@sulkursell9130 yes
Try Wawanesa. No advertising, great insurance
I hate not being able to see and touch an expensive product before buying it. And ironically, the most expensive burn I had from buying an asset sight-unseen, was a... mattress. Even an all-expenses-covered return is still a nuisance. Why would I want to buy a mattress and then have to send it back? What am I going to sleep on in the meantime? Do I want to spend my time and energy continually lugging mattress in and out of my apartment building, ensuring I'm home to accept delivery/pickup, and potentially going long periods of using an airbed while I wait for the most suitable mattress to be shipped? I wouldn't buy a car or a house without seeing them first...
Far more efficient to go to a retail store, lie on the bed and make an informed, experiential decision.
Thats the casper model. It's a so-so mattress, but few will bother to return it, after being hoodwinked by the 'you can return it for months!' ploy.
This is why online will never replace retail for me. Sure it's more time consuming perhaps initially to go to a store, but at least you can feel things before you buy them.
There is no way selling mattresses through retail stores was effective during the pandemic. During the height of the pandemic, all the retails stores closed and when they opened, nobody wanted to be in contact with surfaces that could transmit covid so nobody would want to lay down on display mattresses where other people have made bodily contact. So maybe online sales will be the way to go going forward.
You can't really "try" a mattress anyway. You can touch it but you can't tell how you sleep on it until you.. sleep on it.
@@rcbrascan No one wanted to go to stores because they didn't want to deal with psycho germaphobes that would freak out over someone trying to buy something essential like a mattress. No one wants to gamble on a 10 year investment by ordering online.
DTC works great for repeat purchases, ex. 1-800-contacts, but doesn't seem to work with big purchases you only make every 10 years.
Yeah, I used to spend $600+ on my Rx glasses, but going through Firmoo or Zenni I never spend more than $150. It's worth it for that for sure.
Just look at any other big mattress brand like Serta or Ashley, they both sell other things besides mattresses that one would buy every few years to offset the margins on the larger items.
DTC acne cream
DTC toothpaste
DTC hygiene products make a lot more sense
@@temp_unknown I literally just go to a “americas best” and get two pairs for around 100
@@christianchan9947 Yeah its decent because you can get your skin evaluated and the products are tailored to your skin's needs.
Start-ups really need to be aware of the threat of new entrants. If it was easy for you to enter the market, and if your product is easily replicated, then anyone else can copy your idea and start chipping away at your market share.
Agreed. All those other companies are all "Hey thanks for taking the risk and paving the road for us--now we'll take it from here and launch our own copycat product with great ease that should overtake your business in a few years time"
Which is why branding and marketing is so important. That's why Nike shoes are still hundreds of dollars. At a certain point it's not about the product anymore.
@@orangeapple681 nuke shoes are over $100 because morons pay that much for something some kid in China made and cost the country $1.25 in labor and materials
Your inventive product would have to be raking in several millions of dollars first. Otherwise no competition is going to bother copying your product. The patient and trademark office is who making the money. They even make money selling your schematics for pennies. Companies would be more likely to lobby to have you face regulations or outright ban the sale of your product.
@@pointblank2890 in practice they usually don't overtake and neither do the next 3 companies either. They pour billions into advertising to be market share rivals for a couple years and then realise they need to make a profit. In the end none of these companies make a profit.
Honestly for the longest time I genuinely thought the whole goal of these trendy DTC online brands was to build enough brand recognition and sales for attracting traditional retailers and justifying giving the shelve space. The idea of blowing off the retailer always sounded too far-fetched to me to believe it was the end goal
Agreed you can buy so many D2C brands in Walmart now.
Remember the "as seen on TV" brands? In many cases that was the trick too. Have George Foreman sell a bunch of pressgrills in infommercials, then start selling them at the Big Box stores.
Don't be confused. This video is not about DTC. It's about "silicon valley" DTC. Many DTC companies have been highly profitable for a century.
Im involved in the mattress industry. I have a company we rebuild mattresses, what i do makes me dig deep in every single mattress brand. With casper theres a few issues in my view. First off they make cheap quality mattresses, they focus on making a one density foam which is more on the soft side. Its a preferance thing though, some perople prefer a firm or a medium or a soft mattress, but again everybody is different. The casper mattress is made from a thin layer of memory foam and pretty much the rest of it cheap basic foam. They can advertise as much as they want, it doesnt change the fact that its a cheap quality foam. What really hurts them also is the 100 night sleep satisfaction or they issue a refund, It doesnt take long for someone to realize that the casper mattress is not the best, so their return rate is much higher than other companies. And a return to them is 100% loss, sometimes donated to a thrift company but mostly resold through smaller 3rd party companies, like the companies that pick those mattresses up from the customers homes when they ask for a refund. For example, compare tempurpedic to casper; they both make memory foams, but tempurpedic can easily last someone 10-20 years and the foam will still be in very good condition compared to casper the foam barely reaches a couple years until it starts to soften out.
Ps: casper mattresses are not made in china. They have plants in europe and even here in the united states, ill tell you this though, they do not build that mattress from scratch, they have 3rd party companies make the foam for them and another compamy making the cover and another making the box. If they made the whole thing from scratch, that would definately help them but it wont save them from the cheap quality unless they step their game up.
Thank you for sharing! Pinning this at the top so other viewers may learn from your industry expertise. My analysis focused more on how they hit their growth and scaled over the years riding on venture capital. Your comment provides wonderful insight into how their mattresses actually perform when it comes to manufacturing and product quality.
Yeah. I bought one. It made me sore being in the same position after a little while.
This comment earns you an Honorary MBA!
Do you have any recommendation of mattress brand that is good quality but cheaper prices?
@@ModernMBA i worked at casper for several years (in the early days) and closely with the product development team and can confirm that the currently pinned comment (above) isn't really all that accurate. e.g., the foam in casper's $1k product is less expensive than another brand's $3k competitor, but it's not "cheaper" than other brands at a similar price point. we tested this extensively using third party labs. anyways i could go on, but the product level info here isn't correct. i'm curious who "remain anonymous" is and whether they have any undisclosed biases.
As a Gen Xer I’m shocked that these guys turned down the cash in hand Target money for “mo money mo money mo money”, told you I was old. Take the bag. If you’re that business savvy start another company or remain a operating partner in this one with target. All that money gone…🤦🏽♀️🤦🏽♀️🤦🏽♀️
I was thinking the same thing lol you are selling mattresses - take that money and run lol
Tbr, the millennial mindset of “my company is worth 1000x what you say it is” has paid off for so many people. Look at Instagram: they could have sold for 1mil and walked away with profit, but they said “nope: you’re crazy. We’re worth Way More. Meeting over,” and later sold for 1B.
I could apparently say a LOT about these topics, but Gen X is probably the last generation that thinks that money is tied to hard work. Money is barely even real, and now many founders/CEOs deeply understand that so they use successfully it to their advantage.
@@JB-fh1bb for real I’m not spending that much money on a mattress I can’t at least sit on in a store. If they wanted me to buy one (and I did need a new mattress) putting it in target would have been smart. But Silicon Valley isn’t really that smart at all.
@@JB-fh1bb the younger generations work harder and more efficient
Most DTC companies have been started by marketing professionals that greatly underestimate the logistic/operational challenges and costs of shipping direct to consumer. They’re ops teams can never keep anything in stock because they throw all their budget at marketing and will spend 50k on a singular photoshoot and use the images for a month and a half. I can say as a marketer within these companies we have been talking about the DTC bubble for years and the drastic rise in CAC in the last year and a half has only brought us closer to the burst but we are riding out the high salaries and bouncing from one freshly VC-funded startup to the next for as long as we can. Definitely would recommend all marketers getting well versed in retail because that’s where these companies are turning for their hail mary.
The reason these businesses fail is because they consider a 20% YoY growth to be small. Your business model has to be insanely broken for that not to be a very respectable sales growth.
I agree. They’re perfectly good companies if you don’t spend money like a tech company. Just cut staff and pay like a retail brand, not Facebook, then advertise for performance and you’ll cash flow like crazy
Casper failed because they had one product that they sold at like 15-20x mark-up, except there was no valuable IP, literally any company would offer the same product, and many did.
Yes, nothing unique about a mattress in a box now many other people are offering the same thing.
Their pillows are so soft though
This video is better than any CNBC or WS Journal special I've ever seen. Keep it up, more views will come. What a great video.
I mean the media establishment are an appendage of the Democratic Party. They sell fear to get you to look at ads. Why would they make content that isn’t fear driven like this?
If you think the Republican Party doesn't sell fear, then I don't know what planet you live on. We don't live in a liberal or conservative world. We live in a capitalist world where both parties are "appendages" of the capitalist system. Major news outlets don't care what you believe nor do they want to educate you; their motivation is for you to consume.
@@25yearsnow Mainstream media is definitely left. It’s not like they have any conservative values or ideas on their platform.
Repent to Jesus Christ
“Put on the full armor of God, so that you can take your stand against the devil’s schemes.”
Ephesians 6:11 NIV
J
@@CallSaul489 ?Fox news is the #1 news channel. Is that not mainstream
As soon as a brand reaches a point where their primary advertising channel is email spam I assume that it's a pump and dump scam and won't go anywhere near it Casper hasn't quite reached that point yet, but there are a lot of these DTC brands that have.
I doubt it. We have Walmart and whatever in every town, or not far from every town. Then the internet for education and advertising.
Often, it's independent affiliates that do the spamming, hoping to make more sales, and therefore more commissions. A lot of the DTC companies do offer affiliate opportunities, with the effort to gain additional customers resting on the affiliate. They have to do their own aggressive marketing or they make nothing. These affiliates aren't going to spend much, if anything. And they certainly aren't going to advertise on TV, radio, or Spotify. They are far more likely to hire a cheaply paid crew of 3rd world workers and set them loose to spam everywhere they can, or save the cash and do the spamming themselves. And there will be many of these affiliates, all selling the same products, all competing with each other to make those sales.
@@keithmarlowe5569 only people going to Walmart are people that don't give a shit about quality. I'm getting loads of business from people tired of furniture not even lasting through a move.
People need go stop shopping at businesses that have destroyed local economies and small business in general
Not just email spam, but almost literally ever youtube channel in existence. I've seen gaming channels pimping this stupid Casper shit. (if you want to know where all their profits went, add up all the free beds they gave to millions of YTers.)
@@jfbeam When researching a product I'm interested in, whether it be mattresses, earbuds, VPN's, etc; If they advertise via CZcams sponsorships, I avoid them.
when you're starting a mattress company you have to deal with the reality that no one has brand loyalty because you buy a mattress like every 5-10 years. You have no customer retention. Every customer is a new customer so if you're not constantly advertising you're going to fall off in DTC. That's why being available in a store is so important for this particular product.
turning down 900 million, when you know you’re actually losing money, is really dumb.
It was probably contingent on due diligence, which the owners knew would fail, hence the "nothing less than a billion".
“Are there jetpacks and laser blasters in the future?”
“No, but you can order a generic mattress in the mail.”
I used to work at a Casper distribution center before they closed in August of 2020. Their products were so overpriced for what they were worth, and they themselves were a horrible employer to work for. Charge thousands for their bedding, yet only pay us 13$/hr (minimum wage). They shut down and laid everybody off, they used Covid as an excuse, but really it was because we just weren't getting enough orders to stay open. We would do 200+ orders a day, to 50 all the sudden, if we were lucky. Seems like the customers finally realized and spent their money elsewhere.
If anything they could have sold MORE mattresses during covid.
Very random IMAPOTOZ but we have a mattress company that deals with online returns. Who at casper should we talk to about that?
@@Bookersbones When I worked there, we never got actual mattress returns. Only bedding/bedframes ect ect. I'd assume they went to some 3rd party like yours that deals with online mattress returns if a customer was to return their mattress they bought from us.
I keep saying COVID was the perfect excuse for tons of ailing or failing businesses.
nothing wrong with being paid minimum wage. get over yourself! you were doing a entry level grunt warehouse job, there is no reason at all that you should be paid more than minimun wage.
I remember that online shopping brand called brandless or something similar where they sold “non branded” goods for a supposedly lower price. But what I always said was, brandless IS the brand. It’s their own food brand. Like great value or your local grocery store brand. It wasn’t “brandless” because brandless was the damn brand 🤦♀️
What's old is new again. This idea was first (at least in my memory) back in the 70's, where you have "BEER" beer and "BREAD" bread, sold in Safeway (I think). They even had a similar label: pure white, with nothing but the name of the product on it in a crude font. But yeah - it was basically a generic brand that, in and of itself, became a brand.
If it's 'brandless' then it's not brand, idiot.
Exactly the same as no name brand products at Loblaws
I remember seeing one called "No-Ad"
@@kevinschultz6091 Oh yeah. It was called generic. Black and white labels. I forgot about that
Casper is struggling because the same offering is on Amazon now. Same goes for the other brands you've mentioned with a dilution of their unique brand proposition through rapidly upstarted competitors in the space. Casper was just early to the hype and like you said was dumb not to take the buyout and move on to another venture.
Wish more ppl could understand the Amazon effect smh. Was this even talked about?
The comment I was looking for... I got a name brand foam mattress WITH a bed frame for half the cost of just the casper mattress alone WITH prime shipping.
@@butwhytho4858 Probably because the narrator is not familiar with that situation. In essence, Amazon will drink your milkshake.
You can't compete on Amazon right now unless you are DTC from China and converting dollars to yuan.
The toughest part for any startup owners is to not drink their own koolaid.
They really think their company is changing the world, worth $1-5 Billion, and is going to the be the next Facebook, Apple, Tesla etc.
Think of it like this, would you rather think of yourself as the next Elon Musk, or would you rather be the guys that founded Tesla, (are filthy rich) but are mostly forgotten in the public eye.
Don't shed too many tears, the Casper founders are still worth a few $10 Mils each... all for basically setting up a giant Chinese import business with some snazzy commercials / brand. They turned other people's money in to their own money with some empty promises. They'll be back in a few years with a new idea..
MBAs always think they understand business more than they actually do.
Also the idea that the old mattress buying experience was “antiquated” when consumers are legit walking in, having to buy a mattress worth hundreds of dollars. Of course they’d want to see how it feels first. And no, just because their friend has one doesn’t mean they’ll buy one without laying on it. And how often to friends talking about their mattresses to one another?
You're just not seeing it like a techbro. Don't ever wonder why things are the way they are, instead just assume that everything just needs you to do something obvious to totally upend the status quo. After all, you understand computer programming and that basically makes you better than everyone else.
You know what other industry is in need of disruption? Wheels. Those things are so antiquated that they haven't even changed the shape in the last thousand years. That's why I'm going to change the game with square wheels, invest in my company now and you will be one of the ones that profits from this Ponzi scheme.
There are plenty of things stupid about the traditional mattress buying experience.
@@sealeo5772 Thank you
@@ribbonsofnight ~ Yet that doesn't mean there's a better way. Some things in life are a crap shoot and/ore just plain ol inconvenient. But its is still the best way to do it just because there is no better way. Wouldn't it be great to not have your chest cut open to have a messy, dangerous bypass surgery? Well, guess what, they're been trying to figure out a way to do it better, but there is no better way. Doesn't mean we should stop trying to innovate any process or procedure, but things will always eventually shake out to the best, most efficient way, even if that way is not actually truly efficient.
Even though they have a generous return policy, most people would not want to deal with the hassle of returning a mattress. They'd rather try it out at a store and make a judgment call and live with it.
Working for a company that uses the DTC model as a small part of our business, I can say it’s a battle. We’ve realized that we need use DTC more as an advertisement in itself and also a test market. The shipping and transportation costs alone now-a-days are enough to kill the margins.
Years ago I ordered a Temperpedic while laying in my hotel room. Best product placement ever.
I wondered why I wasn't hearing Casper and on my podcasts anymore and now I know. Thanks!
The algorithm somehow brought me here and I loved the video. I have since watched all of your other videos and they are all amazing.
I look forward to the next one. I hope you get the success to match the quality soon.
Thank you for the kind words - your comment made my day! I am very grateful. If you have any topics you're interested in, feel free to suggest.
The goal is to follow the anthology series where every episode covers a different industry, company, story, and strategy.
I've been starting to wonder if we might see a resurgence in traditional travelling salespeople. They could help bridge the gap between online-only DTC and brick-and-mortar retail by offering demonstrations and samples.
Would people open their doors to those people? They are better off with a tiny stall in the mall. Use one side as a pull down bed and the other side as whatever.
I can see this taking off as a touring road show.
I don't think so. TBH most of us don't really open our doors to strangers anymore
Absolutely.
Multilevel marketing works better.
On the topic of DTC products, recently I was interested in getting some function of beauty shampoo and conditioner but i couldnt justify the high price tag. Walked into target a few days later and right there in the hair care section was an entire display with their products. Glad i didn't spring for the 2-3x online markup.
Yeah, agree, we went from brick and mortars to online because there was always everything there, and for cheap, but in reality, the cheap things are the ones we usually spot istantly by eyes, like electronics, TV, smartphones, which are cheaper then retail electronics stores. But, online, common households are expensive, agree. You can just go to a supermarket, walk around, find the cheapie you need and cash it by yourself, because at the end, you just eliminated by yourself the online retail jobs of the warehouse picker and the delivery, which, I guess per item should be around 2-5 usd
I needed a super cheap hybrid mattress when I moved apartments last year and didn't want to pay shipping costs twice. These bed in a box companies seem cool but they were outside of my cost (I seriously want a Purple mattress, but that definitely is outside of my budget right now).
As such, I went with Walmart. With lots of searching, I found a bedframe I loved and a not-perfect but decent 14 inch queen sized hybrid mattress, total about $800-ish. Not sure if I'll have it 10 years but it's a million times better than when I was sleeping between the floor and an air mattress that repeatedly had issues.
Also, a word of advice, always get a mattress protector, even if you don't have kids. Some people might think they're still made from stiff, noisy plastic, like what the mattress originally might have come in, but we've moved well beyond those days now. For $40, you can get one that's mostly fabric with just one side that's something like a polyurethane material that also operates like fabric (not sure if that'swhat it is made from, you'll have to check the packaging). You won't feel it under your sheets. However, it's invaluable for how it protects the bed, especially for those who will be spending a lot on theirs.
After spending about 12 hours building my bed and setting up the mattress, I fell sick. And that sickness...had some troubling side effects that about caused me to damage my mattress, lol. After the close call, I made a trip to Bed, Bath and Beyond for a new one. I just wash and dry it with the rest of my bedding (though check the labeling to see if drying is recommended. I dry mine on low).
Check sales and try them in store. I was sure we needed the hybrid, but the standard worked great. Got it for 20 percent off and we're very happy with it.
I have a purple mattress and LOVE IT SO MUCH. When you get the money I highly recommend lol.
@@unclebuck6250 I got tired of having a spring mattress, so that's why I went with hybrid. I weigh too much to go full foam mattress, lol.
Don't think there's any in-store mattresses that could've beaten the price I got from Walmart with the features I wanted: 14 inch queen hybrid that was mostly firm for about $450. Also, having side handles for moving the mattress was an absolute MUST, lol. And...my car can be very unreliable,so even getting to the store can be difficult. Lastly, the idea of laying on beds others have laid on, especially at this current time, sounds like I'm just asking for trouble 😂
All that said, I absolutely do see the merits of trying a bed in-store, though. If I had more money, I would've gone with a better hybrid from somewhere else (I get back pain sometimes with my current one. It's good for a back sleeper with your weight distributioned all over, but I'm a side sleeper and sometimes I find myself in an indention. Thankfully, I don't share the bed with anyone so I can just move to a new spot until the bed resets itself, but that still gets annoying).
@@unclebuck6250 Sorry, was your commment referring to the Purple mattress? My first reply might not have been toward what you were talking about, lol! Sorry.
@@BewareTheLilyOfTheValleyYes, it was in reference to Purple. They have different models that you can and should try in certain stores.
My wife's back pain was the catalyst for searching and it has helped. I didn't know I had a tight lower back until we had that thing. The first couple of weeks were interesting.
Well done video!
The goat himself
Not comfortable buying a mattress you’ve never seen or touched before? No problem! Sleep on it for three months and insert it into your rectal passage once you're done complaining about it.
I think the biggest problem with many of these startups is that you acquire a customer but they only pay once, and that payment isn't enough. The customer for Casper at least doesn't grow the market by telling enough friends, and they don't buy a recurring revenue, so their LTV is low. I would imagine Harry's has better LTV:CAC ratio and allbirds better virality than Casper.
But if you're already doing lookalike ads on FB, then you're already spending money advertising to the friends who would buy without an ad.
Agreed!
My brother in law ordered a casper matress every time he went camping and had it delivered to a random RV park, then just dumped it on the ground, slept on it for 3-4 days, and returned it. Absolute Madman
he should get some morals smh. Doesn't he feel bad wasting the companies money and buying something he never had any intention of keeping.
@@animeandstuff5377 not his fault the company is dumb enough to accept any returns no questions asked.
@@angelosanchez1475So you think it's perfectly fine to do whatever is allowed regardless of how disingenuous and wasteful you are? Good to know some people have no personal standards or morals of their own.
@@daydreamerz it's hilarious.
@@angelosanchez1475 people like you are the reason why we can't have nice things. You would swindle your own grandma out of money.
DTC 's usually have generous return policies, which often lead to abuse. I managed returns for a DTC clothing company. We'd ship clothes out, and the customer would only pay for what they kept. Return abuse was rampant. Most would get the box on Wednesday, and ship it all back Monday. It was obvious that they'd wear the clothes for the weekend,ship them back, and wait for the new box . We paid shipping both ways, so the abuser had a brand new wardrobe for the weekend without spending a dollar.
Very big brained
Arbitrage for the Consumer
I used to work at Nordstrom, their return is huge… customers return used lipsticks, opened perfumes, worn sandals and swimming suits, Dyson hair dryers, even empty moisturizer… they said the moisturizer only made her uglier…
It made me think of how people are abusive, irresponsible fake and selfish.
This was a well researched and delivered video with plenty of data to back it up. Yes casper messed up, it's arrogance and ego won & the business failed as a result. But in my opinion they failed because 1. Their acquisition costs were never low enough & more importantly 2. They didn't have a proper strategy to market other products to their existing customers. Boot strapped DTC brands are a much better idea because they get their numbers right from the get go.
This 👏
Ya that's an interesting point - can you get them to buy a pillow? Or maybe an ebook subscription or headspace subscription to fall asleep faster!
really depends on the product.
Casper's business model would work if they offered a superior product. For a product that is suppose to last years, you have to offer something unique
It’ll never work bc you don’t have return customers. You sell a person one mattress and they most likely won’t ship with you again for 5-10 years
@@cheeseballs9579 that’s what I’m confused about, eventually all the people who’ll buy a Casper will, and then what? It’s not like fishing where you can buy a bunch of goodies, and then you have to come back to buy new line or upgrade a part.
@@Drewstir68 Then they might buy it again 5-10 ears down the line. There are plenty of brick and mortar mattress stores, furniture stores, and every single car dealership works like this. The issue with Casper, was that they did not have a backup plan for when their plan A failed.
@@Sapreme but those other businesses aren’t spending 75% of profits on advertising
@@cheeseballs9579 "The issue with Casper, was that they did not have a backup plan for when their plan A failed."
It's the same thing over and over: Without any secret sauce, you can only live on hype so long. Casper as a firm didn't have any special talent or ability - just connections with the right people.
Excellent video, but that one headline about “there are now over 175 online mattress brands, and you can’t tell them apart” really stood out to me, because I have noticed there were seemingly a ton of them and they all seem to go for the same look and aesthetic, and it’s like - why??? Why are there SOOO many companies trying to exist in this space ? We do not need that many mattress companies, so why do people keep starting new ones? If the original online mattress company is struggling then I doubt any of the other ones are gonna make it. It would be great to see a follow-up video that examines why this is a thing and why so many companies think they can exist in the insanely crowded space, and why none of them are trying to be different.
honestly if Target did acquire casper, the brand will likely prosper, as they'd have massive online and offline presence
They were fools for not taking the money. The execs drank too much Kool aid and thought too much of themselves.
That’s sad. I actually have a Casper mattress and love it. I guess a good product doesn’t help you if the business model sucks
I love their pillows!
I’ve gotta say though, I’ve bought two Casper mattresses in the last 8 years and love them.
I have yet to drive by any matress store that is not having a going out of business sale. Amazing industry.
That’s what led me to purchase a Casper mattress. All the mattress stores around me has been having going out of business sales for the past 10 years, so it just seems like a big scam. Plus I drive a sedan, I can’t drag a mattress home myself.
Yep that howbyou pull them in! We so good we allways out of bizz naaaahhsssss
Sad to hear this! I just bought a new mattress for the first time in my adult life and I bought a Casper. I bought it from a retail store because personally I’d never buy a mattress without laying on it first. I think with a company like Carvana, they have a great idea there and I bought my car online last year because you can read the Carfax, and mileage and determine if the car would be good or not. You can also test drive the car in 7 days and return it and with a car dealership you can only test drive it once. So with carvana their 7 day return policy allows you to bring the car to a mechanic, get it looked over before deciding if you want to keep it.
I get Casper has a 100 day return policy but who wants to deal with that hassle if the mattress isn’t comfortable enough
The 100 day return policy is a prime example of "good on paper, but doesn't fix the real issue of inconvenience"
Agreed. I’ve bought 2 mattresses in my 35 years and it took me months of trying out different brands/types/styles before I chose one. I am not a particularly picky person, but I just can’t understand the logic of buying a mattress that you have never laid eyes, feet or butt on. If it was for a guest bedroom, sure? But for a product that I am meant to sleep on daily for years? No.
I tried a Casper mattress and had it returned because the offgassing gave me terrible headaches for almost a month. It was a pain in the butt. I’ll never buy a mattress sight unseen again.
It's a FREAKING mattress company, it was destined to fail. You may purchase a mattress once every 10 years or so. Sure, it's cool to get the mattress delivered and watch it "grow", but after that process is done, it's just a regular mattress, the novelty is gone. Plus we all know mattress companies are just a front anyway.
Yeah alright relax, idiot.
i got a mattress topper for like 50 bucks on amazon that "grew," and it's better than the casper mattresses i've used
Sorry, ThePeoplesChamp what do you mean by a front? A front for what?
@@patmebg3794 i’m pretty sure they’re referring to the theory that physical mattress stores are a front for money laundering. Like why do most mattress firms appear next to OTHER mattress firms on the same street, etc.
@@akaste4413 Really? Never heard that. Is it something to do with not having regular sales do you think?
Warby Parker succeeded because Luxxotica was a vertically-integrated monopoly that owned just about everything related to glasses, so WP was able to heavily undercut them while still giving themselves a healthy profit margin. Mattress retail is saturated.
Just stumbled upon your video in my recommended, and the quality is amazing! The way the video is sectioned allows me to follow your point, the footage provides visual representation of what you are saying, and the voiceover is clear with no overly loud/annoying/distracting music. I truly thought you had millions of subscribers just from the look of this video. You are doing great work, keep it up!
This brings us to the overarching question: how do mattress stores in general stay in business?
looool
Money laundering
Even if people only replace them once a decade, there are enough people that everyday is someone's time to buy
They make huge profit off of selling just one, so they only need to sell around 4-5 of them a month to stay in business
I don't live in the US, so the situation may be different. Over here, mattress companies are not really mattress companies in the strictest sense They are foam making companies that have a brand for high-end consumers ("chiropractor approved" brands); another brand for low-end consumers (single-layer memory foam); they also have clients from hospitality industry, government contractors (hospitals for example), furniture manufacturer (sofa and couches), general supply stores (arts and crafts, tailoring), auto body shops (car seats) etc.
This is literally the best channel I’ve ever came across we need more conversations like this
It's vey bizarre to me that they were touting the idea that people wouldn't want to go to stores to try them out before buying them. Like that was some awful thing. What the heck are you smoking? What I really don't want is buying something like that sight unseen, and even if returning it is free, the damned hassle of waiting for pickup and replacement. And there are SO many mattress stores everywhere! I don't know how they get as much business as they do.
Well put. Allow me to add some thoughts. What do people do with old mattress when buying new? They get rid of it. And furniture stores like Value City will give you a bag to put it in (for hygiene reasons) and haul it away when delivering your new one. Strike one for the online dealer for not offering that option. But let's say you buy it anyway, and you dispose of your old one somehow, and now your 30 days in to your 100 days and you say "this thing is cheap junk" and return it. Now you got nothing, though I think most folk would get a new one delivered first.
wow this is such a good video :) i was so surprised it only had 2k> views, you deserve more!!
Thank you very much for the support! I am genuinely appreciative of your kind words.
@@ModernMBA awesome video, I am so curious now what is the ideal business if you are starting one? It seems the meta keeps changing, and most of these companies are just trying to stay afloat with new investor funds. Is the ideal business now to have a much smaller company with as simple a business model as possible?
Very first thought after finishing and not surprised to see that manifested as the top comment
Am I missing something ? Cause it has 230k views
@@GenevaKar the algorithm has spoken
I got a mattress from Casper. Perfectly happy with it but at the same time, it really wasn’t any different than just buying a mattress at the mattress store. Problem is for me, I was more annoyed by the week it took to ship. Next time I rather just drive 30 minutes and put it in the back of my car and have it immediately
I have a Casper too and I quite like it, but I actually got it at a store.
As a millennial, I prefer to know the product I buy is going to be of decent quality. No amount of FB advertising is going to make me buy a product because I cant even do the touch and feel test... especially with a freaking mattress. And returning things in the mail is a pain in the ass. Much easier to return something to the store if you don't like it or it's defective.
Also, I REALLLLLLLLY hate that bland text format and logo design layout those companies use. Makes it really difficult to differentiate between brands and just makes it look like some generic store brand.
I am sure they wanted to cut out the middle man so they can provide higher quality products to consumers and it had nothing to do with them being able to keep a larger profit share for themself.
I read this in a sarcastic way, because it 's the only way it should be read, or written.
@@anmnou Yeah, congrats, must have been very hard to figure that one out.
I wouldn’t say all birds was a cheaper option for shoes. $250 for a pair of trail running shoes is still quite expensive.
The most expensive shoe I’ve seen on the website is $155. Where do you see a $250 shoe?
I just got this in my feed. Great videos, just binged your whole library.
I just found this channel but have a hobby of reading and researching business failures. This fell so much directly inline with the trend of “podcast promoted startup” frauds that it’s hard to classify anyone who buys those products as a non-moron. The late night infomercials of the 90s were less fraudulent than your typical podcast advertisement
There was a D2C company trying to put their products on the shelves of a company I worked for.
So they book training for staff to sell the mattresses and the very first thing out of the trainers mouth is that the company was a marketing company that decided to get into the mattress business.
What a shitty way to get sleep specialists motivated to sell your product. It appeared to us that the product was a total afterthought.
Can you make a video of one/some examples of DTC companies that are doing it right or being successful?
yes! it seems all these new wannabe unicorn "tech" firms are just failing miserably.
I think Teekampagne is successful. They sell black tea and green tea in 500 g bags directly to the customer. Selling only two varieties of tea in large quantities means that they have less storage costs and need less Surplus .
They definitely should have taken a wider product range near the start like they have now. People rarely buy mattresses; and even when I did, I found a 12" memory foam one on Amazon for $300. They may have been in a much better spot today if they had always pitched themselves as "the mattress and bedroom shop".
One big thing that kept me from buying a DTC mattress is that I heard if you return a mattress, they can't reuse it and they have to throw it away. I don't know if this is true or not, but that is such a blatant waste that can be completely avoided by going into a brick and mortar store
Brick and mortar retailers might seem antiquated but they do help acquire new customers and give you major help on selling your product
Casper failed by killing customer confidence. I was in the market when they were hot, but instead of responding with respect to criticism, they doubled down on abusing their customers. MeUndies went from quality fabric to crap, too bad.
wow, damn I actually forgot the specifics about that. they sued 2 or 3 mattress review sites right? and at least one of them had user reviews?
I looked into Casper when I was mattress shopping several years ago. The product looked good, however I ended up picking up a Nectar brand mattress on Amazon for almost half the price of Casper.
How was it?
@@ellieblunden1463 no compliments with the Nectar, it was a great improvement from the pillow top that I had previously. Far more support. The worst thing is definitely that it sleeps hot, but that is going to largely be true with memory foam mattresses. If money we're no object I would love to try a Purple mattresses because of the intermediate layer of pocketed gel. I'm sure it sleeps colder but I only spent like $450 on the Nectar
We got pretty nice memory foam mattresses from wal-mart delivered for $200 each. Mattresses are a commodity, meaning people will just buy whatever is cheaper, faster, or more convenient.
@@get8bit And then they'll throw them away and replace them way too soon. Which is bad for the environment AND your wallet.
Given how important your mattress is to your well-being (back strain, sleep, focus, etc) it's actually worth making it a serious investment, with some serious investigation up front.
I traveled a *lot* on business, different hotels and countries every week; plus my family does long road trips in the US. I/we kept track of the mattresses we slept on and then eventually bought a commercial (i.e. heavy duty, long-lasting) mattress on-line, direct from the manufacturer.
Comfort is a personal thing but, for me, I soon learnt which mattress would have me up on-time, awake, and ready to focus at 8am the next morning after a 12-14 hour flight with a 10 hour time shift got me to the hotel late the previous evening. And I have to say that, the moment I realized my hotel mattress used "memory foam" or had a "foam topper", I also knew I was going to be dragging ass for the rest of that trip (and never booked that hotel again).
@@stainlesssteellemming3885 I sleep better on my $200 mattress than many expensive ones I've tried. Going on 9 years now so I don't know how I'm "hurting the environment." You should sleep on bales of hay if you really want to be environmentally friendly.
I have a casper original hybrid mattress that I bought in 2019, and I think it is very good. Had no idea they were struggling.
Same I love mine
Such a brilliant, brilliant explanation!
You are obviously extremely knowledgeable and it was a pleasure to watch this. Thank you for the work you put into this!
Strange that they spent that much on advertising, yet I have never heard of them or their products until I saw this video.
Interesting how it works, some companies will spend tens of millions to never get seen by a good chuck of viewers. I never get G&E ads but I’ll get the same 5 ads, including Casper, for weeks, and I’m wondering how does this make sense, the same ad of a product I have no interest in, seems like a good way to spend money…
Thats really surprising. Like the video said, from the 2014 era onwards, Casper was one of the more heavily advertised products on internet mediums (at least). But I guess there's still some avenues their ads havent reached
Fascinating. I've heard more about Casper than any other mattress brand by far. We just run in different internet circles or something.
They bought ad spots on every single popular podcast for like 3 years. If you listened to podcasts during the Casper era, you heard Casper ads. It was as bad as audible and squarespace.
I built several successful D2C brands from 2011 - 2018 and what I noticed was that increasing ad costs and competition made it more difficult every year. If you're not focusing on organic growth or retail channels/Amazon then you simply will die off with increased ad costs.
I was already back in Fintech by the time COVID came out, so I can't even imagine how hard it is now.
Your video was great! Definitely subscribed, your voice was very calming to listen to after a hard and stressful day.
I think Casper just didn't have a distinguishing feature that could be advertised online. Purple is a pretty *good* example of how to run a DTC "newfangled" company. They had an easy-to-demonstrate feature that was plastered on every CZcams video for like a year or two. They even eventually expanded into having some presence in retail stores so that you could try them out in person before you buy. It's so simple.
I agree, they positioned themselves as more of market disrupter than they actually were, similar to Carvana. You've been able to online shop for used cars for decades now, but they actually deliver it and do a little extra paper work - which eventually, they didn't even do that- and act like they revolutionizing an industry. Sears sold mattresses out of a catalog 50 years ago too, and look at what happened to them.
Funnily enough I'd never even heard of Casper or if I did then they felt so insignificant that I'd forgotten about them.
There are DTC brands that work though. The mountain bike world has a few good examples like Polygon and YT Industries. Part of a bike shop bike's price is the service they provide so DTC actually does end up being cheaper for a brand new bike. Enough YT and Polygon bikes have been out there and reviewed by real people without sponsorships to show that they truly do offer more bike for the money (for the right person: one that's able to set up their own bicycle).
What a great channel! I'm almost finished with my MBA now. Subbed right away
This is awesome. This is one of the best videos on the internet. And your honesty and clarity is awesome.
Sum this up quick: their LTV/CAC is shit. Plenty of DTC small caps that do this way better than Casper and either are profitable or extremely close with a lot of cash on the balance sheet.
Thats what happens when all you do is spend on marketing and overpay your execs
It's interesting because my first exposure to DTC mattresses was with those egg-based Purple commercials all over CZcams. Then I saw some stuff from Nectar and Tuft & Needle, but only saw Casper in some furniture stores. I assumed they were a cheap copy of the others. Had no clue they were the original ones
How come have I never heard of this awesome badass channel? Subscribed. Can’t wait for more
I’ll be honest I have zero care about what you’re talking about but you’re so good at making this video that I’m going to finish watching it. You should explain fishing and just about anything else it’s really incredible how you put together this video very well organized very prepared it’s incredible
Dude I'm a business school grad who watches Company Man with my friends when we're high. So glad this channel was recommended to me, it gives you just enough actual insight into a company and its financial position. You deserve 100x more subs
Amazing Case Study which deserves more views and i am positive that this channel will take-off to new heights with such brilliant case studies.
This video was perfect! Please continue to make more! It’s like a CNBC or Business Insider video that actually did research! Bravo!
Amazing content!
Didn't know this story and the approach your used to explain all is super interesting.
You have a new subscriber
As someone who has been a customer of many DTC products I found that a lot have something and that’s their customer service stinks! I know this isn’t all of them, I’ve experienced some with good customer service but like you mentioned they spend so much on ads, marketing and overhead that the service is bare minimum.
Every time I hear a story like this about some new business fad, it makes me want to abandon the capital market entirely. Whether you're buying from Target or a hip new D2C company, it's all the same shit. I wanna get my shoes from a cobbler, my mattress from the one old lady in town who knows how to make mattresses. Why does everything have to be made out of bullshit?
Throw away culture
You need to get the word out push for that kind of community, make sure you use your local centre and get involved in local politics a small investment could regunivate a Street and bring that back and you can push that message on. I luckily come from the UK where that kind of stuff is still relatively common (not completely but still exists).
I absolutely agree and feel your pain. I find that everywhere I go (USA), the people that sell the item do not have a clue about the product or the field they work in--it's all so superficial. I long for people that apprenticed and really know their metier...everything has become so subpar in both quality and service.
Economy of scales is a bitch.
There is a few issues with your statement. Making products like shoes is specialized. It requires special tooling, material, and skill. I live in Texas, it's common to find a town with a bootmaker. They don't use the traditional number system for shoe size. They measure your feet to make you a boot that fits your toes, arch, heel height, width, etc and if you want they'll make it out of whatever color or material you ask. I have a pair with a steel toe and rubber sole for when I worked at a mechanic shop and a fancy leather soled Ostrich boots for dancing at weddings. That guy does not know how to make common shoe styles like running or loafers and much less specialized shoes like wrestling or snowshoes. Not to mention it's totally pointless to spend $300 on boots for a kid or teenager. They also take time to make. If your high heel breaks the cobbler isn't going to fix it during your lunch break, you'll still need to get a cheap pair of shoes to last you until it's fixed. It's a good product and goes to your community but the cost is higher and there is no guarantee a local guy won't screw you over or cut corners too. A pair of Red Wings cost about the same as my rubber boots and are better. You want old world craftsmanship, that is not separate from the capital market. Guess where the boot maker gets his thread, dye, and a lot of his tools from? The Wal Mart or Home Depot near his house. The cool thing about capitalism is if you feed the need you can seek out one of these specialists and they'll make whatever you want.
I just found my new fav channel. Keep up the great work.
the quality and depth of these videos are great thank you
Just started the video. I have a couple pairs of allbirds. high-top Wool and tree runners.
The wool shoes really are waterproof, I tested that in one of the most recent "atmospheric river" storms we saw in the bay area last year where I came back to 3 inches of standing water at the SFO uber pickup location.
The tree runners are good daily drivers. Comfortable and durable.
Both sets clean up very well but I do expect to see the shoe's integrity dwindle with more and more washes in the future.
It's a good shoe, I normally buy 60 dollar Nikes and Cole Hans and wear those out before I have to re-buy. Allbirds is a good compromise to pay more and have that extra added utility.
I also buy all birds because of the sustainability aspect. I love them
Enjoyed your video. Think the 20% returns was something that should have been highlighted much more. That was a serious problem.
A couple of months ago I was in the market for a new mattress and went to a number of stores trying out different mattresses. In the end, I wound up buying a mattress off the internet sight unseen because it appeared the mib brands had better reviews than the in store brands. Now I am strongly considering sending that mattress back because I now wake up with worse body aches than I did with my previous store bought mattress.
I haven’t seen a channel this good since TheCompanyMan. Nice job.
I'm not into global branding and marketing but cracking the EU market is way harder I believe since there is more difference between countries than you'd think. USA market is I believe way easier to scale if you have the right skills and resources. In EU you have to have teams/companies to nearly all countries or it won't work.