For Architectural Digest, by Carrie Hojnicki.
For a specific yet sizable market in the United States, Casper is utterly synonymous with the word mattress. Thanks to aggressive early growth in New York, Los Angeles, and San Francisco, the sleep company (as it calls itself) has gone from a lean five-founder start-up to an operation with more than 250 employees in multiple cities around the world and hundreds of millions of dollars in annual sales, completely dismantling industry norms along the way. Three years in, and with millions of happy sleepers under its belt, Casper shows no signs of stopping, recently releasing a suite of complementary products including sheets, pillows, and even a dog bed. AD sat down with cofounder and Chief Operating Officer Neil Parikh to talk about the company’s rapid rise to success, its operational challenges, and how a disruptor of its kind maintains a market advantage.
Architectural Digest: Where did the idea for Casper come from?
Neil Parikh: My cofounders and I saw a couple of interesting problems. We knew the mattress industry was terrible. Going to buy a mattress was oftentimes like buying a used car, a wholly bad experience. Combined with that, we saw that people were focused on being healthy. There was a strong focus on wellness, where people were drinking green juice, tracking their sleep, using a Fitbit, but there wasn’t a concrete way for people to think about investing in their sleep. So, Casper was born at the intersection of those two things, thinking about how we disrupt the mattress industry but also having a really holistic focus on sleep and wellness. I think we really struck a nerve with people who are both looking for a better experience with mattresses but also thinking more holistically about their sleep.
AD: What difficulties did you run into when you were first starting out?
NP: Almost everyone said “no one will ever buy a mattress online” but we set out to prove that that’s not true, especially if you offer amazing service and you have the best product. Our hypothesis was that people would actually try it out, love it, and tell other people. At the beginning, because our products were mostly made in America, we ended up running out of inventory very quickly; we actually sold out on the first day. During the first 18 months we were continuously digging ourselves out of a hole to build and acquire more inventory and bring up our factories and train more people to make our product because we were just caught a little off guard. It turned into a positive thing because it taught us the importance of delivering great service to make up for it. I remember this one phone call I had with a to-be father who was about to bring home his wife and kid from the hospital and they needed the mattress same-day. It struck us that what we’re doing is really impacting people’s lives. So that’s when we decided to build out an awesome customer experience team. We’ve now got 70 people between New York and LA who are really dedicated to serving people, and that has become a pillar of the brand.
AD: Since you launched, you’ve gone from being a single disruptor — with traditional mattress companies as your competition — to having quite a bit of start-up competition; has this changed the way you operate?
NP: Not really. In 2014, no one had heard of a mattress start-up. In terms of disrupting the industry, around 90 percent of beds are still bought in-person so there’s a tremendous area of growth. And I think that there will be a lot of online mattress start-ups that can put something into a box and can build a pretty website. I think that actually disrupting a category means creating the most innovative products — Consumer Reports just named us one of the best mattresses ever — having a really deep relationship with our customers, and ultimately having a true R&D team. We have a team in San Francisco that has over 50 patents between them so we’re really understanding what we call “functional sleep,” this idea of developing new products that regulate temperature control, humidity, all of these things. It’s pretty easy to go to a manufacturer and say “hey, build me a mattress that I can sell online.” It’s really hard to actually disrupt the industry itself. So, it hasn’t really changed what we’re doing because our goal is still to build the best product, to be the leader.
AD: I want to go back to something you said earlier, this idea that operationally you were able to accomplish a lot, especially doing same-day mattress deliveries. To what extent was Casper’s strength in operations responsible for its success?
NP: It’s huge. I think that the largest mattress company in the United States has over 3,500 stores and so they’re very distributed, but frankly they have huge amounts of infrastructure, thousands of square feet in every store, which is super inefficient. We said, “What if we flip this on its head and leverage UPS for delivery?” We’ll figure out how to optimize our distribution and we can actually deliver same-day or next-day in the vast majority of the country and dramatically cut down our shipping costs. It costs us probably a fifth to a tenth of what it costs a normal mattress store to ship these products. And then at our core we’re a technology company; we’ve got 60 people who make up our product and engineering team who are really thinking about how we can build technology that’s going to get the products to our customer faster, how we track them better, really thinking about the operations side of things. In San Francisco, New York, and LA you can get Casper delivered to you faster than you can get a slice of pizza delivered to you. I think the technology we’ve built is in many ways responsible for that, and our plan is to grow and scale this over time.
AD: To that end, you consider yourself a “tech company” first — what does this mean for a mattress manufacturer?
NP: Since the beginning our CTO, Gabe Flateman, has been helping us think about every problem as something that technology can help you get around. We have people in San Francisco, New York, LA, London, and Berlin so that we can be on 24/7 talking to each other. With our foundational technology, which supports our shipping logistics infrastructure, we actually went to most of these contract manufacturers and helped them build technology to get better volume control than they ever had before. So we use technology as a way to get better at every single part of the business.
AD: You have quite a few cofounders — something start-ups are often advised against. Was this a challenge at any point? Or a competitive advantage in the long-run?
NP: I think in the short- and long-run it was a competitive advantage. There were a lot of times having multiple cofounders was helpful because if you really trust each other, when each has an area of expertise, you can fire on all cylinders very quickly. Our Chief Creative Officer, Luke Sherwin, has a tremendous knack for really building brands and thinking about creative. Our Chief Product Officer, Jeff Chapin, spent ten years at one of the best design firms in the world and knew a ton about physical product design and has 20 or 30 patents himself. This allowed us, from the very beginning, to split up the work. Some people we’re like, “We’re going to build the technology, the website, the brand.” And the other half of us were living down in South Carolina where we were putting time in on the factory floor after we developed the products. We were able to go from start to launch pretty quickly.
AD: Did you study the practices of any other companies?
NP: The classic design agencies are always inspiring, especially thinking about the IDEO model or other firms that practice human-centered design. In almost everything that we do — as opposed to saying, “Let’s come up with an idea for a product and hope people like it” — everything starts with understanding what the customer wants. When we set out to make sheets, for example, we interviewed tons of people, watched them sleeping, we put sensors on them, and even before we had a hypothesis, we were trying to figure out what goes on in the bedroom. We found that people who were sleeping on high thread count sheets were actually waking up throughout the course of the night. We realized that the idea that you need hotel-collection, thousand-thread-count Egyptian cotton sheets, which has been said forever, was a myth. Too many threads actually captures air and humidity underneath your sheets, and your body — in its effort to regulate temperature — kicks your feet out from underneath the sheets so that you can let that heat and humidity go. We realized that if we actually make a 400-thread count but use a super high-quality cotton, it not only feels better but is actually better for your body. We also take inspiration from companies like Apple, where it’s just about being the best in class, having an obsession with your products. We have teams that are just focused on the covers of our products, or just the packaging, the way it’s presented, making sure every single functional detail is thought of. For example, the Casper tag on our fitted sheet, which people struggle to put on the right way, goes directly in the center of the front of the sheet so it’s essentially a guide to putting on the sheet. It’s not a huge thing, but the little things, when you add up ten of them, can make a substantial difference in how the product is used.
AD: Thinking about how you used the human-centered design process, what was the strangest thing you learned about the way people sleep?
NP: The most interesting one was about sleep positions. For a long time we’ve been told that everyone is either a side sleeper, a back sleeper, a stomach sleeper, that’s it. Actually, though, as we were watching a lot of people sleep, it turns out that most people shift positions throughout the course of the night. That was fascinating because it was a big insight for us. People had been making very different kinds of products for different kinds of sleepers for a long time, but it turns out that one product works for most people. Insights like that have really helped our design strategy.
AD: Several financial journalists have written about a “mattress bubble” in reference to the Casper-led industry explosion — what do you make of this? Is this something you’re concerned about?
NP: Not really. We’re committed to building a brand for the long-term, we’re committed to R&D, to owning our relationship to our customer and delivering on our value proposition, but I always like to think about solving hard challenges because those are hard to copy, right? Building a website, taking a photo shoot, that’s not hard, but your brand is not a logo, your brand is the way your customer feels about you when they interact with your product, when they open it, when they have an awesome service experience, so that’s what we’re focused on building. It’s not just a marketing company that’s putting random stuff out there. And now we’re starting to see compounding effects. For the first time now, so many people who have bought a mattress are coming back to buy pillows, and vice versa. I think there will be a ton of online mattress companies, but I think that there will hopefully always be one true sleep company and that will be Casper.
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