Less than four years ago, direct-to-consumer mattress company Casper didn’t even exist. In the summer of 2013, would-be cofounders Philip Krim, Jeff Chapin, Neil Parikh, Luke Sherwin and Gabriel Flateman were just five guys randomly assigned to sit together at a start-up accelerator in New York City.
Now, Casper just may be on its way to unicorn status. In its latest fundraise in May, the company reportedly received $75 million from retail giant Target, in a round expected to reach $100 million. Though the terms were undisclosed, the money pushes the company beyond the $500 million valuation it received with its $55 million series B raise in 2015.
How It All Started
Casper CEO Philip Krim says the “stars aligned,” for the co-founders to meet. Parikh, Sherwin and Flatemen knew each other – they had started an e-commerce company together. When Krim and Chapin sat with them at that N.Y.C. accelerator, they all became friends and started comparing notes, says Krim on the podcast. As it turned out, Krim, Parikh and Chapin had something in common – the sleep industry.
Krim had founded The Merrick Group, and its two largest websites were AngelBeds.com and SleepBetterStore.com. Parikh’s father was a sleep doctor with direct access to the experts. Jeff Chapin, an industrial designer and engineer, had worked at IDEO designing, among other things, mattresses.
Flateman and Sherwin had other important business expertise: Flateman knew e-commerce, and Sherwin, having worked Saatchi & Saatchi and Thrillist, had a background in media and brand building.
Random perhaps, but certainly serendipitous. The five banded together to disrupt a $14 Billion industry by designing a single, affordable “mattress in a box” consumers could easily buy online and have shipped to their homes.
Fundraising and Pushing Past Doubts
Krim’s vision was to build a company that would revolutionize sleep — a gargantuan task that the founders believed would require backing from the best technology investors.
The problem was, says Krim, not one technology investor believed they could succeed. They heard no “dozens and dozens and dozens of times.”
When they pitched, they would hear things like:
- “You’re talking to technology investors, but you’re going to sell mattresses? How does that make sense?”
- “You’re going to make selling mattresses cool? Like okay, yeah, good luck.”
- “You’re going to market with just one mattress?”
- “You’re gonna sell a mattress that everyone wants to lay on without having a retail presence?”
The constant rejection took its toll on the co-founders.
“That can be something that really is very demoralizing and … it certainly made us question our conviction,” admits Krim.
But, he says, “the best ideas come when no one else, or very few people, see things the way that you see it. That’s what creates the opportunity.”
Eventually the team was introduced to Ben Lerer, founder of Thrillist and managing director of Lerer Hippeau Ventures (LHV), who actually had a “thesis on the [mattress] industry needing change” even before Casper came calling, says Krim. And Lerer already had experience investing in direct-to-consumer businesses like Warby Parker, which allowed him to understand the vision.
LHV lead Casper’s seed round in early 2014. Its series B in 2015 attracted celebrity investors like Leonardo DiCaprio and Adam Levine.
Name of Author: Daniel Rodic