The Exchanges

Q Can I ask, you mentioned a couple of different elements there from kind of consumer education to the changes in P&L. What elements of opening up retail really en masse like you are now with the new plans, what elements do you may be concerned by or perceived to be significant challenges that you're thinking about a lot?

A I think the element that I'm probably most concerned about is just the level of complexity it brings. And we joke with Casper, we started with a very elegant, Simple business model. We had one product line that we took to market through one channel of distribution in one geography, the U S and we've now built an amazingly complex business in that we're operating in multiple geographies. We're in Europe, we're in Canada, we're in the U S and we're operating through multiple channels of distribution. We have our.com business, but we also have retail stores and we have retail partnerships with folks like target and Nordstrom's and several others. And so navigating that complexity, something that I'm keeping a very close eye on because it's difficult to do. And it's something where if we get it right, it really does create the next generation of retail experiences where a consumer can navigate between online and offline seamlessly. And if we get it wrong, then we create a lot of consumer confusion and it would be bad for the brand and bad for the business. So to me, that's the most important element of how we're scaling the business that we need to get right.

AI assessment note: “element that I'm probably most concerned about is just the level of complexity it brings”

Q Can I ask, you mentioned a couple of different elements there from kind of consumer education to the changes in P&L. What elements of opening up retail really en masse like you are now with the new plans, what elements do you may be concerned by or perceived to be significant challenges that you're thinking about a lot?

A I think the element that I'm probably most concerned about is just the level of complexity it brings. And we joke with Casper, we started with a very elegant, Simple business model. We had one product line that we took to market through one channel of distribution in one geography, the U S and we've now built an amazingly complex business in that we're operating in multiple geographies. We're in Europe, we're in Canada, we're in the U S and we're operating through multiple channels of distribution. We have our.com business, but we also have retail stores and we have retail partnerships with folks like target and Nordstrom's and several others. And so navigating that complexity, something that I'm keeping a very close eye on because it's difficult to do. And it's something where if we get it right, it really does create the next generation of retail experiences where a consumer can navigate between online and offline seamlessly. And if we get it wrong, then we create a lot of consumer confusion and it would be bad for the brand and bad for the business. So to me, that's the most important element of how we're scaling the business that we need to get right.

AI assessment note: “the element that I'm probably most concerned about is just the level of complexity”

Q We mentioned the elements of the investor base there. I did chat to Dennis at IVP at one of your And he discussed the new CFO hire. Tell me, how did you think about this addition to the team and that professionalization at the C-suite financial level and your thought process around that?

A Dennis is the man, and IVP has been a great partner. They let our series be around, and we couldn't have asked for better partners for us then. And Dennis is right to highlight how exciting the CFO hire has been for us. So we brought Greg McFarlane on in January of this year. And she's already made a tremendous impact on the business, and I have complete confidence will continue to make the right impact on the business for us. Greg has had an amazing career at really Fortune, 500 companies. The last 10 years of his career has been as the CFO of public companies. Most recently, he was the CFO of H&R Block, which is a giant multi-channel business, global business at scale. And Greg has really helped us think about what are the right What are the right ways to continue to build this business, both with a front commercial lens, as well as a back office lens to make sure that we're scaling effectively and in a bulletproof way, and also with an eye to make sure that we get IPO ready, given his experience on that front.

AI assessment note: “make sure that we're scaling effectively... and also with an eye to make sure that we get IPO ready”

Q Can I ask, with the benefit of hindsight, would you have made that kind of core CFO hire earlier? I often interview founders, and they say, I wish I had hired a head of talent or head of people earlier. Do you wish you had hired the new CFO earlier in the journey, and what would your kind of advice and thoughts

A I absolutely wish I had hired Greg and almost all of my leadership team earlier than when we did. You know, the trade-off is always at the time, do you find a candidate quickly, or do you stay patient and find We were in market for a CFO for a good amount of time, and it wasn't for a lack of meeting great CFOs that were interested, but we really had a very specific view of who we wanted and the background and the role that they would play within Casper, and Greg has just been a perfect fit on that front. He's had a tremendous impact across the entire business, not just the finance function, although that has been great, and he's just a great operator, and that's what we were looking for, and fortunately, that can take a while to find, and so My advice to any founder when they're talking about executive level hires is as soon as you have the inkling that you might want to look for that, I would kick off the search and try to get out there as soon as possible. When they find the right hire, they wish they had done it earlier, and so the only way to do that is really to allocate a lot of time to the search and to start it as early as you kind of think you need to be out in market.

AI assessment note: “I absolutely wish I had hired Greg and almost all of my leadership team earlier”

Q Absolutely love it. And then tell me, how did that passion then translate into Casper and what was the desire to change the way we think about sleep?

A So with Casper, I'm one of five co-founders. Four of us actually met in a co-working space here in New York City where we were working on various ventures. I was working on a mobile marketing startup that helped Local businesses generate new leads. And some of my co-founders were also working on kind of a digital e-commerce play in the consignment area. And we all shared a common belief around sleep and how important sleep was. Actually, one of my co-founders, Neil, his dad's a sleep doctor. We had all had varying experiences around buying mattresses and other sleep products. This was also back in the, when the rise of Fitbits and Jawbones were really helping people track their sleep and understand their sleep at a much deeper level. And it also was around the time where every week it seemed like new data was coming around, coming out around how impactful sleep was to everything, to creativity, to happiness, to intelligence, et cetera. And we kept coming back to the idea that buying a mattress was still one of the worst consumer experiences in existence. And we ended up having a thesis around it and having a lot of conviction that we could do better. We could help people sleep better by changing the way they think about and buying the products that are critical to getting a great night of sleep. You know, we started with the mattress. That continues to be a large part of our fo…

AI assessment note: “we all shared a common belief around sleep and how important sleep was.”

Q Absolutely love it. And then tell me, how did that passion then translate into Casper and what was the desire to change the way we think about sleep?

A So with Casper, I'm one of five co-founders. Four of us actually met in a co-working space here in New York City where we were working on various ventures. I was working on a mobile marketing startup that helped Local businesses generate new leads. And some of my co-founders were also working on kind of a digital e-commerce play in the consignment area. And we all shared a common belief around sleep and how important sleep was. Actually, one of my co-founders, Neil, his dad's a sleep doctor. We had all had varying experiences around buying mattresses and other sleep products. This was also back in the, when the rise of Fitbits and Jawbones were really helping people track their sleep and understand their sleep at a much deeper level. And it also was around the time where every week it seemed like new data was coming around, coming out around how impactful sleep was to everything, to creativity, to happiness, to intelligence, et cetera. And we kept coming back to the idea that buying a mattress was still one of the worst consumer experiences in existence. And we ended up having a thesis around it and having a lot of conviction that we could do better. We could help people sleep better by changing the way they think about and buying the products that are critical to getting a great night of sleep. You know, we started with the mattress. That continues to be a large part of our fo…

AI assessment note: “buying a mattress was still one of the worst consumer experiences in existence.”

Q You speak about ulterior motives there. I'm intrigued. Having accepted strategic money, and kind of successfully so, what advice would you have for founders who are contemplating accepting strategic money?

A So a lot of times, strategic are investing for reasons that are not financially motivated, unlike a VC who usually you know what their motivation is. So understanding what the motivation is, and then what they're looking to solve with the investment, I think is really important. So sometimes the big company wants to learn technology, IP from the small company, and that can work out well if the right commercial agreement's in place, but it could also work out very dangerously. Sometimes the strategic investor wants to learn how the small company operates, but that also can come with sometimes disalignment of interest. And so I really think understanding the motivation from the strategic and then setting up the investment so that interests are as aligned as possible is really important. Because when the investment's not just about financial motivations, it can often come with strings attached. And sometimes those attachments can play out in odd ways that you might not have intended.

AI assessment note: “understanding what the motivation is, and then what they're looking to solve”

Q What do you know now that you wish you'd known at the beginning of the Casper journey?

A There are so many things that I wish I had learned sooner in my career to help with the Casper journey. I'm not always the most patient of people, and patience pays off in a number of different ways. You know, we had mentioned about hiring the right people. Oftentimes, you just want to get a search done because searches can be painful, but you have to stay patient to find the right cultural fit and the right fit for the role that you're looking to fill. I would say the same also goes with investors. Oftentimes, you want to get a fundraising done, or you want to be efficient with your time or focus, but it really is important to get investors on board that have the same vision as you and our Fully aligned on what you want to do with the company, and both of those areas and many others are examples of where patience pays off.

AI assessment note: “I'm not always the most patient of people, and patience pays off”

Q Can I ask, with the benefit of hindsight, would you have made that kind of core CFO hire earlier? I often interview founders, and they say, I wish I had hired a head of talent or head of people earlier. Do you wish you had hired the new CFO earlier in the journey, and what would your kind of advice and thoughts

A I absolutely wish I had hired Greg and almost all of my leadership team earlier than when we did. You know, the trade-off is always at the time, do you find a candidate quickly, or do you stay patient and find We were in market for a CFO for a good amount of time, and it wasn't for a lack of meeting great CFOs that were interested, but we really had a very specific view of who we wanted and the background and the role that they would play within Casper, and Greg has just been a perfect fit on that front. He's had a tremendous impact across the entire business, not just the finance function, although that has been great, and he's just a great operator, and that's what we were looking for, and fortunately, that can take a while to find, and so My advice to any founder when they're talking about executive level hires is as soon as you have the inkling that you might want to look for that, I would kick off the search and try to get out there as soon as possible. When they find the right hire, they wish they had done it earlier, and so the only way to do that is really to allocate a lot of time to the search and to start it as early as you kind of think you need to be out in market.

AI assessment note: “I absolutely wish I had hired Greg and almost all of my leadership team earlier”

Q want to start today with the news that you'll be opening 200 new Casper stores. But tell me, Philip, from all the headlines we're seeing, you know, the end of retail, the doom and gloom, you've said before that retail done poorly is on the way out. Let's start with that. And what does retail done poorly Poorly mean, and why does that necessarily mean it's on the way out?

A You know, this sounds obvious or glib, but retail done poorly means, in my mind, not giving the customers what they want, and retail done right is giving customers more than what they want or think they need, and that's what Casper aspires to do, and it really goes back to the founding principles of Casper and what got the founders excited. You know, we loved the idea of a direct-to-consumer business because it means we could talk to our customers every day, and we could leverage That data, that feedback, and that love to really build a very unique business and brand. And for us, the direct-to-consumer model was never about a digital-only experience. We always wanted to give customers what they wanted. And in this category, mattresses and sleep products, they are highly considered product categories because they make such a big impact on people's lives. And given that, still a lot of people, the actual majority of people still want to go into a store. They want to touch and feel and learn about these products. And we thought we could create an experience around that that was completely different than anything a consumer had done before, not only in our category, but really we thought about retail even more broadly. And I think that's what we've been able to accomplish with our first endeavor into stores. We now have 20 locations throughout the U.S. and Canada, and they've been …

AI assessment note: “retail done poorly means, in my mind, not giving the customers what they want”

Q You speak about ulterior motives there. I'm intrigued. Having accepted strategic money, and kind of successfully so, what advice would you have for founders who are contemplating accepting strategic money?

A So a lot of times, strategic are investing for reasons that are not financially motivated, unlike a VC who usually you know what their motivation is. So understanding what the motivation is, and then what they're looking to solve with the investment, I think is really important. So sometimes the big company wants to learn technology, IP from the small company, and that can work out well if the right commercial agreement's in place, but it could also work out very dangerously. Sometimes the strategic investor wants to learn how the small company operates, but that also can come with sometimes disalignment of interest. And so I really think understanding the motivation from the strategic and then setting up the investment so that interests are as aligned as possible is really important. Because when the investment's not just about financial motivations, it can often come with strings attached. And sometimes those attachments can play out in odd ways that you might not have intended.

AI assessment note: “understanding what the motivation is, and then what they're looking to solve”

Q sure. In terms of scaling the business there, you also mentioned scaling the product line earlier. I speak to many VCs. They often say that kind of expanding product line and kind of upsell in some ways is symptomatic of not an attractive enough core market. How would you respond to this with the expansion of your product line and kind of that core thinking from maybe the VC perspective?

A Well, so from the VC or investor perspective, the mattress business is a great business to be in. It's a great product category, and it has been for decades, and that's why I jokingly comment that if you run into pretty much any Private Equator. They have a perspective or direct knowledge of the mattress business because they've all owned a piece of it at some point in time, and that's because it's a highly predictable business with really strong consumer demand, and the market grows kind of single digit, compounded annually over decades, and so it's a fantastic business to be in. We know this year that something like twenty million Americans will buy something over fifteen billion dollars worth of mattresses, but But then align that with is what we want to do with Casper with the brand and the business. And this really goes back to the founder vision of creating the world's first global sleep brand. And sleep is much more than about your mattress. Your mattress is obviously a really critical ingredient to it, but your pillow matters, your sheets matter, your temperature of your sleep environment, your humidity, your dew point, sound, light, all make a big difference to your sleep quality. And we want to be the one-stop shop, the end-to-end brand about helping people get a better night of sleep. And I think our brand has permission to do that. And one thing I don't think Casper…

AI assessment note: “from the VC or investor perspective, the mattress business is a great business”

Q Would you agree with the conventional wisdom that the largest role of the CEO really is management upscaling?

A I think that's one of the main roles of the CEO, certainly building the executive That allows the business to scale. I think the other bucket is, is really making sure the business is capitalized for the business plan that you have in mind. But between those two things, I think that's absolutely the core of the CEO role. And I think that's why I continue to spend a significant amount of my team with the executive team. And then if we're running a search for a new addition to the executive team, I definitely plan to allocate a good amount of my time to that because getting that cultural fit and getting that skillset fit is so critical to making sure that businesses Continues to scale, especially if it's a business on a really high growth trajectory.

AI assessment note: “I think that's one of the main roles of the CEO”

Q We mentioned the elements of the investor base there. I did chat to Dennis at IVP at one of your And he discussed the new CFO hire. Tell me, how did you think about this addition to the team and that professionalization at the C-suite financial level and your thought process around that?

A Dennis is the man, and IVP has been a great partner. They let our series be around, and we couldn't have asked for better partners for us then. And Dennis is right to highlight how exciting the CFO hire has been for us. So we brought Greg McFarlane on in January of this year. And she's already made a tremendous impact on the business, and I have complete confidence will continue to make the right impact on the business for us. Greg has had an amazing career at really Fortune, 500 companies. The last 10 years of his career has been as the CFO of public companies. Most recently, he was the CFO of H&R Block, which is a giant multi-channel business, global business at scale. And Greg has really helped us think about what are the right What are the right ways to continue to build this business, both with a front commercial lens, as well as a back office lens to make sure that we're scaling effectively and in a bulletproof way, and also with an eye to make sure that we get IPO ready, given his experience on that front.

AI assessment note: “with an eye to make sure that we get IPO ready”

Q could not have set me up more perfectly for my next question there, because I did want to discuss strategic investment. You had Target lead your latest round. Tell me, strategists are often an issue of debate when it comes to investing for the founders themselves. How did you think about this, and what was that kind of internal decision making around Target, and whether that was the right lead?

A Great question. I echo your sentiments that strategists always should be, I think, debated to understand if it's the right fit for the company. And I think part of that debate really is, what is the motivation of the strategic? Why would they be making this investment? And we're very lucky to say that Target is Has been the perfect partner for us. They saw the vision of what Casper wants to create in the world. They saw what we want to do within the wellness landscape, and it actually fit very perfectly for Brian and Kathy's vision for what they want to create with target. And we've been working very closely with that. And so I think because motivations were completely aligned because they saw the opportunity that we saw and because we could help them do more around this category and do it in a way that's accretive to building Casper and building the vision that the founders had for Casper. It's been a perfect partnership, and they've been a great strategic partner, and we've been very lucky. Of course, that's not always the case with strategics, and oftentimes have ulterior motives, but for us, it's worked out really great.

AI assessment note: “part of that debate really is, what is the motivation of the strategic?”

Q sure. In terms of scaling the business there, you also mentioned scaling the product line earlier. I speak to many VCs. They often say that kind of expanding product line and kind of upsell in some ways is symptomatic of not an attractive enough core market. How would you respond to this with the expansion of your product line and kind of that core thinking from maybe the VC perspective?

A Well, so from the VC or investor perspective, the mattress business is a great business to be in. It's a great product category, and it has been for decades, and that's why I jokingly comment that if you run into pretty much any Private Equator. They have a perspective or direct knowledge of the mattress business because they've all owned a piece of it at some point in time, and that's because it's a highly predictable business with really strong consumer demand, and the market grows kind of single digit, compounded annually over decades, and so it's a fantastic business to be in. We know this year that something like twenty million Americans will buy something over fifteen billion dollars worth of mattresses, but But then align that with is what we want to do with Casper with the brand and the business. And this really goes back to the founder vision of creating the world's first global sleep brand. And sleep is much more than about your mattress. Your mattress is obviously a really critical ingredient to it, but your pillow matters, your sheets matter, your temperature of your sleep environment, your humidity, your dew point, sound, light, all make a big difference to your sleep quality. And we want to be the one-stop shop, the end-to-end brand about helping people get a better night of sleep. And I think our brand has permission to do that. And one thing I don't think Casper…

AI assessment note: “sleep is much more than about your mattress”

Q want to start today with the news that you'll be opening 200 new Casper stores. But tell me, Philip, from all the headlines we're seeing, you know, the end of retail, the doom and gloom, you've said before that retail done poorly is on the way out. Let's start with that. And what does retail done poorly Poorly mean, and why does that necessarily mean it's on the way out?

A You know, this sounds obvious or glib, but retail done poorly means, in my mind, not giving the customers what they want, and retail done right is giving customers more than what they want or think they need, and that's what Casper aspires to do, and it really goes back to the founding principles of Casper and what got the founders excited. You know, we loved the idea of a direct-to-consumer business because it means we could talk to our customers every day, and we could leverage That data, that feedback, and that love to really build a very unique business and brand. And for us, the direct-to-consumer model was never about a digital-only experience. We always wanted to give customers what they wanted. And in this category, mattresses and sleep products, they are highly considered product categories because they make such a big impact on people's lives. And given that, still a lot of people, the actual majority of people still want to go into a store. They want to touch and feel and learn about these products. And we thought we could create an experience around that that was completely different than anything a consumer had done before, not only in our category, but really we thought about retail even more broadly. And I think that's what we've been able to accomplish with our first endeavor into stores. We now have 20 locations throughout the U.S. and Canada, and they've been …

AI assessment note: “retail done poorly means, in my mind, not giving the customers what they want”

Q A final element I have to ask, you mentioned the kind of customer acquisition channel diversification there. I'm intrigued. What do you consider to be kind of a healthy ratio between organic to paid? And how do you think about that balance?

A I think it varies greatly. Based on businesses, categories, and life cycle of a business. So in the beginning, we didn't spend any money on paid advertising. We really helped get the word out about Casper through word of mouth and through press and through content, and that was really effective for us. As the business scales, we now have the ability to invest into building the brand and to getting the word out about Casper, and we have big ambitions about what we want to build for Casper specifically. We want to be a material market share owner of this And that means we have to invest broadly in order to do that, to make sure that we're educating multiple segments of the mattress buying population. But it really depends on what you want to do with your business. If you want to build a small, great lifestyle business that doesn't have ambitions to really establish a great consumer brand, then you might not necessarily On the paid side, and you could really build it slowly over time in a very organic fashion. If, like Casper, you have very big ambitions and will build a very big brand over time, then investing to do so is what we've decided to do, and we're very fortunate that we have great investors along with us that see our vision and want us to help accelerate our vision.

AI assessment note: “I think it varies greatly. Based on businesses, categories, and life cycle of a business.”

Q No, I agree with you there. I do have to ask also, we managed to obviously target themselves, but I think it's also worthy to discuss the size of the check itself. It was a large round. I'm really interested. How do you think about When is that right time to go large and really pour fuel on the fire and what you think needs to be in place first?

A Again, I think it varies based on company lifecycle and also on founder vision and ambitions. For us, we obviously were seeing significant product market fit. We really see a path to building a very large company. So for us, a larger slug of capital made sense to really help accelerate our plans across a number of fronts. We were able to accelerate our international ambitions to Which kind of checked the box of building the global brand that we want to build. We were able to accelerate our product development initiatives, so we were able to hire more folks for our San Francisco office to really build an incredible pipeline of products that we will be taking to market this year, next year, and years to come. And it also helped us accelerate our ability to build the brand that we want to build and do so by leveraging some of Target's distribution, but building that as our first foray into that channel of distribution for us Where eventually Casper products will be widely available and really help educate consumers that there's a new, better way to shop for a lot of the products that haven't been reinvented in a very long time. So for us, it really was a perfect alignment with where the business was and what the life cycle was and our ambitions to We're fortunate to say that the investments we made have paid off in spades, and I think that's why 2018 is such a strong year, even st…

AI assessment note: “For us, we obviously were seeing significant product market fit.”

Q could not have set me up more perfectly for my next question there, because I did want to discuss strategic investment. You had Target lead your latest round. Tell me, strategists are often an issue of debate when it comes to investing for the founders themselves. How did you think about this, and what was that kind of internal decision making around Target, and whether that was the right lead?

A Great question. I echo your sentiments that strategists always should be, I think, debated to understand if it's the right fit for the company. And I think part of that debate really is, what is the motivation of the strategic? Why would they be making this investment? And we're very lucky to say that Target is Has been the perfect partner for us. They saw the vision of what Casper wants to create in the world. They saw what we want to do within the wellness landscape, and it actually fit very perfectly for Brian and Kathy's vision for what they want to create with target. And we've been working very closely with that. And so I think because motivations were completely aligned because they saw the opportunity that we saw and because we could help them do more around this category and do it in a way that's accretive to building Casper and building the vision that the founders had for Casper. It's been a perfect partnership, and they've been a great strategic partner, and we've been very lucky. Of course, that's not always the case with strategics, and oftentimes have ulterior motives, but for us, it's worked out really great.

AI assessment note: “because motivations were completely aligned because they saw the opportunity that we saw”

Q No, I agree with you there. I do have to ask also, we managed to obviously target themselves, but I think it's also worthy to discuss the size of the check itself. It was a large round. I'm really interested. How do you think about When is that right time to go large and really pour fuel on the fire and what you think needs to be in place first?

A Again, I think it varies based on company lifecycle and also on founder vision and ambitions. For us, we obviously were seeing significant product market fit. We really see a path to building a very large company. So for us, a larger slug of capital made sense to really help accelerate our plans across a number of fronts. We were able to accelerate our international ambitions to Which kind of checked the box of building the global brand that we want to build. We were able to accelerate our product development initiatives, so we were able to hire more folks for our San Francisco office to really build an incredible pipeline of products that we will be taking to market this year, next year, and years to come. And it also helped us accelerate our ability to build the brand that we want to build and do so by leveraging some of Target's distribution, but building that as our first foray into that channel of distribution for us Where eventually Casper products will be widely available and really help educate consumers that there's a new, better way to shop for a lot of the products that haven't been reinvented in a very long time. So for us, it really was a perfect alignment with where the business was and what the life cycle was and our ambitions to We're fortunate to say that the investments we made have paid off in spades, and I think that's why 2018 is such a strong year, even st…

AI assessment note: “For us, we obviously were seeing significant product market fit.”

Q A final element I have to ask, you mentioned the kind of customer acquisition channel diversification there. I'm intrigued. What do you consider to be kind of a healthy ratio between organic to paid? And how do you think about that balance?

A I think it varies greatly. Based on businesses, categories, and life cycle of a business. So in the beginning, we didn't spend any money on paid advertising. We really helped get the word out about Casper through word of mouth and through press and through content, and that was really effective for us. As the business scales, we now have the ability to invest into building the brand and to getting the word out about Casper, and we have big ambitions about what we want to build for Casper specifically. We want to be a material market share owner of this And that means we have to invest broadly in order to do that, to make sure that we're educating multiple segments of the mattress buying population. But it really depends on what you want to do with your business. If you want to build a small, great lifestyle business that doesn't have ambitions to really establish a great consumer brand, then you might not necessarily On the paid side, and you could really build it slowly over time in a very organic fashion. If, like Casper, you have very big ambitions and will build a very big brand over time, then investing to do so is what we've decided to do, and we're very fortunate that we have great investors along with us that see our vision and want us to help accelerate our vision.

AI assessment note: “I think it varies greatly. Based on businesses, categories, and life cycle of a business.”

Q I do have to ask, I'm a bit of a nerd, I have To be honest, if we're totally true, I'm always intrigued by margins and kind of margin changes. From an economics perspective, how does retail fundamentally change maybe the margin structure of your originally DTC business?

A So if you think about the P&L of a retail business versus an online business, there's some different drivers of growth within that business. Online, you have to spend to get traffic. You have to acquire customers through marketing channels. With stores, The storefront themselves are actually doing the brand building and the customer acquisition lift. So instead of spending on marketing, you have to spend on having a storefront and work with a landlord on that front. And so there's a bit of a difference on the P and L there, but what we're seeing is that the stores are having a really great impact to the growth of the business, to the top line. They continue to build awareness about our products and our brand and the markets where we have stores are actually growing faster than the markets where we don't have stores. They are a great acquisition tool because they give a consumer who's online shopping a reason to come into the store and talk to someone and learn about what the right products are and what our philosophy around our product design ethos is. And they have done really well for just giving customers what they want. Our customers from the day we launched the business on April, 2220 14, we're asking us to come try the product, touch the product, feel the product. Every day since we launched the business, we had customers knocking on our door literally to lay on the produ…

AI assessment note: “instead of spending on marketing, you have to spend on having a storefront”

Q I do have to ask, I'm a bit of a nerd, I have To be honest, if we're totally true, I'm always intrigued by margins and kind of margin changes. From an economics perspective, how does retail fundamentally change maybe the margin structure of your originally DTC business?

A So if you think about the P&L of a retail business versus an online business, there's some different drivers of growth within that business. Online, you have to spend to get traffic. You have to acquire customers through marketing channels. With stores, The storefront themselves are actually doing the brand building and the customer acquisition lift. So instead of spending on marketing, you have to spend on having a storefront and work with a landlord on that front. And so there's a bit of a difference on the P and L there, but what we're seeing is that the stores are having a really great impact to the growth of the business, to the top line. They continue to build awareness about our products and our brand and the markets where we have stores are actually growing faster than the markets where we don't have stores. They are a great acquisition tool because they give a consumer who's online shopping a reason to come into the store and talk to someone and learn about what the right products are and what our philosophy around our product design ethos is. And they have done really well for just giving customers what they want. Our customers from the day we launched the business on April, 2220 14, we're asking us to come try the product, touch the product, feel the product. Every day since we launched the business, we had customers knocking on our door literally to lay on the produ…

AI assessment note: “instead of spending on marketing, you have to spend on having a storefront”