Casper chased 'the Nike of sleep' at a $90M-a-year loss — then sold to private equity

Casper made its name selling one mattress in a box, then tried to become 'the Nike of sleep', stretching into dog beds, pillows, a smart nightlight and even CBD gummies to capture the 'sleep economy'. Emilie Arel, who took over as CEO from founder Philip Krim in November 2021 when Casper announced it would be taken private by Durational Capital Management, called that era 'shiny penny syndrome': 'The strategy was to be the Nike of sleep. Nobody knows what that means. That sounds very exciting, but hard to execute on. We weren't making any money.'

The numbers backed her up. Net losses passed $92 million in 2018; in 2020 revenue grew 13% but the net loss neared $90 million, with marketing spend of $156.8 million — more than 30% of revenue. The brand had been public for barely a month when Covid hit. Then came a second admitted error: as home-focused rivals 'pour[ed] money into' marketing, Casper cut back. 'We miscalculated. We made the wrong call as a leadership team. And so our competitors outgrew us,' Arel said at eTail Boston in August 2022.

Losses plus supply-chain problems ended in the Durational Capital take-private announced in November 2021, with Krim out and Arel in. The refocused Casper declared 'We're not in the business of not making money anymore': mattresses only, no new stores for at least a year, and a network capped at 73 against a previously announced 200-store North America plan. 'We did not build them in an efficient way... They were run like showrooms in the past,' Arel said, putting store associates on commission instead.

Net losses: $92M in 2018 and ~$90M in 2020 on $156.8M marketing (over 30% of revenue); taken private, store count capped at 73 versus a 200-store plan

The 'sleep economy' expansion — dog beds, nightlights, CBD gummies — diluted the brand and never made money; the CEO called it 'shiny penny syndrome'.

Marketing burned more than 30% of revenue ($156.8M in 2020) to sustain growth the underlying economics could not support.

When Covid demand arrived, the leadership team cut marketing while rivals poured money in — 'We miscalculated. We made the wrong call as a leadership team. And so our competitors outgrew us.'

Stores were expensive to build and 'run like showrooms', so the 200-store plan stalled at 73 locations.

'Be the Nike of sleep' works while the money lasts. A brand that stretches into everything stands for nothing — and when funding dries up, the sprawl gets unwound back to the one product that paid.

As a private company under Durational Capital Management, Casper refocused on being 'a mattress retailer', froze its store count at 73 for at least a year and preached 'a culture of frugality' — in what Arel called the worst mattress market in over 20 years, where consumers pull back on big-ticket purchases first. She argued the stores can be profitable and remain Casper's best showcase, since almost 80% of mattress purchases happen where people can test the product.