Jun 28, 2021 · 1h 20m · how-i-built-this
Casper: Philip Krim
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of NPR's 'How I Built This,' host Guy Raz interviews Casper co-founder Philip Krim about disrupting the traditional mattress industry through direct-to-consumer innovation, memorable branding, and omnichannel expansion. Krim reflects on navigating explosive early growth, intense market competition, and the valuation headwinds of taking the company public.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Guy holds 34.5% of the talking time here. How this is scored →
Guy as informed peer 3.3 Guest teaching 2.8 Guest disagreement 1.5 Guy pushing back 1.8
speaking balance: gold is Guy, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 1:02:35 Krim rejects narrative regarding Sleepopolis financing
Philip firmly rejects Guy Raz's framing regarding the media controversy surrounding Casper's loan to JAC Media to acquire Sleepopolis and change reviews.
Hardest push from Guy ▶ 1:02:30 Raz directly asks if review manipulation story is falseGuy Raz refuses a gentle deflection and directly challenges Philip by asking: 'So the story I just said is not true?' regarding the controversial affiliate site acquisition.
Biggest teaching moment ▶ 31:18 Krim corrects Raz on household mattress buying cycleKrim corrects Raz's assumption that customers only buy mattresses every 6-8 years by presenting data showing households buy every 2-3 years across multiple beds.
Guy holds their own ▶ 1:09:20 Raz confronts Krim with precise valuation plunge metricsRaz demonstrates deep market command by detailing the precise numbers behind Casper's valuation drop from $1.1B private valuation down to $500M IPO and $300M market cap.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Guy as informed peer | Guest teaching | Guest disagreement | Guy pushing back | Why |
|---|---|---|---|---|---|---|
| The Direct-to-Consumer Phenomenon and Casper's Market Rise | 0 | 0 | 0 | 0 | Host introductory monologue setting up the history of direct-to-consumer businesses, mattress market dynamics, and Casper's valuation rise and drop. | |
| Philip Krim's Early Entrepreneurial Ventures and Dropshipping | 4 | 3 | 1 | 1 | Krim shares his early dropshipping ventures in college. Raz connects Krim's multi-site approach to early Wayfair, and Krim explains the negative cash conversion cycle. | |
| Discovering High Margins in the Traditional Mattress Industry | 3 | 4 | 1 | 1 | Raz asks why mattress margins were uniquely high, allowing Krim to educate listeners on the historical oligopoly, private equity control, and legacy brand power in the category. | |
| Scaling and Exiting The Merrick Group | 4 | 2 | 1 | 1 | Raz explores the Merrick Group's plateau and exit, noting that startup sales often leave founders with little cash, which Krim confirms based on rising ad costs. | |
| Moving to New York and Founding Vocalize Mobile | 3 | 2 | 1 | 1 | Krim discusses founding Vocalize Mobile and the friction of SMB sales, while Raz references the Pareto principle regarding enterprise versus small business customers. | |
| Meeting Co-Founders and Validating the Casper Concept | 2 | 2 | 1 | 1 | Krim recounts meeting his co-founders at an accelerator and vetting the mattress concept with Jeff Raider of Harry's and Warby Parker. | |
| Assembling the Founding Team and Reimagining the Mattress | 3 | 3 | 2 | 2 | Raz jokes about his early IKEA boxed mattress, prompting Krim to playfully point out the poor durability of cheap foam and outline Sleepy's opaque pricing schemes. | |
| Securing Seed Funding and Engineering the Ideal Mattress | 3 | 4 | 2 | 2 | When Raz assumes mattresses have a low 6-8 year replacement rate, Krim corrects him with data showing average multi-bed households buy every 2-3 years, before describing seed fundraising. | |
| The Unboxing Experience and Naming Casper | 2 | 2 | 1 | 1 | Krim details how branding the unboxing experience triggered organic YouTube virality and explains the humorous origin of the Casper name. | |
| Explosive Launch and Extreme Fulfillment Challenges | 2 | 3 | 1 | 1 | Krim recounts the massive operational bottlenecks following launch, including shipping customers Aerobeds from Amazon until Amazon banned their account. | |
| Series A Funding and the Broader Sleep Brand Strategy | 3 | 3 | 1 | 1 | Krim explains Casper's Series A financing with NEA and the strategic goal of expanding beyond mattresses into a comprehensive sleep brand with 50%+ gross margins. | |
| Content Marketing, Van Winkle's, and Demographics | 4 | 3 | 1 | 1 | Raz discusses content marketing ventures like Van Winkle's, and Krim reflects on missing the sleep content wave that later propelled apps like Calm and Headspace. | |
| The Influx of Competitors and Mid-Show Break | 4 | 3 | 2 | 3 | Raz probes the risks of shared contract manufacturing facilities, and Krim admits he was initially too dismissive of fast-following DTC competitors. | |
| Navigating Affiliate Review Sites and Legal Controversies | 6 | 4 | 4 | 6 | Raz presses directly on Casper's lawsuits against affiliate review sites and the Sleepopolis acquisition financing, prompting Krim to dispute the media's framing. | |
| The Target Partnership and Road to the Public Markets | 3 | 3 | 2 | 2 | Raz asks about reported Target acquisition talks, and Krim clarifies they opted for a minority strategic investment and nationwide retail distribution instead. | |
| The 2020 IPO and Navigating Valuation Headwinds | 6 | 3 | 2 | 5 | Raz presses Krim on the painful valuation drop from a $1.1B private valuation to a $500M IPO and subsequent $300M market cap amid post-WeWork public market skepticism. | |
| Executive Resilience and the 100-Day Risk-Free Guarantee | 4 | 4 | 2 | 2 | Raz expresses disbelief at the economics of the 100-day risk-free guarantee, and Krim explains that returned beds are recycled locally while customers receive full cash refunds. |
Statements from this episode (26)
Raz: At least 170 direct-to-consumer mattress brands sell online
“Today, There are at least a 170 direct to consumer brands that sell mattresses online.”
Raz: Casper lost half its market value after 2020 IPO
“At one point, private investors valued the brand at over a billion dollars. But since its initial public offering on the New York Stock Exchange in 2020, Casper's market value has dropped by half.”
Krim: Negative cash conversion cycle makes e-commerce capital-efficient to launch
“And then the nice thing about the model which was, It's true also for Casper when we started it is just a, it's a negative cash conversion, which is a fancy way of saying customers give you the money to buy the goods before you have to put the money out. So it…”
Krim: Early mattress giants drove online searches but lacked e-commerce
“Mattresses, I realized, like, they had big margins. It's also an industry that was very slow to embrace the internet. They were doing a lot of direct response advertising, you know, Tempur-Pedic, Sleep Number back then were growing their businesses through dir…”
Krim: Oligopolistic Control and Legacy Brands Protected High Mattress Margins
“For the last several decades, it's been a very tightly controlled industry, and when things are an oligopoly or a duopoly or a monopoly, that's when you're able to really protect pricing, protect margins, and you see it in other industries. You see it in the r…”
Krim: Made zero money from 2013 sale of first mattress startup
“No, I didn't walk away with any money.”
Krim: Selling services to small businesses is exceptionally hard due to stakes
“Selling to small businesses is really challenging. These are businesses which I appreciated. Like, every dollar matters. These are businesses that are family businesses where, you know, if something doesn't work, you know, they're making less money personally,…”
Krim: Mattress makers renamed identical beds across stores to block comparison shopping
“Right, and that was one way that you couldn't price shop it. So it very well could be that Macy's is selling ABC mattress, and Sleepy's is selling XYZ mattress. Those could be the same mattress for all intents and purposes, but you would never know that becaus…”
Krim: Pre-launch surveys showed consumers only recalled Ikea or Tempur-Pedic mattresses
“You know, even, even at this point in time, you asked most people, and we did this survey work before we started Casper, was what kind of bed do you sleep on? Almost no one could recall it, and if you could recall it was usually either Ikea or Tempur-Pedic”
Krim: Average household shops for a mattress every two to three years
“The average household's in market every two to three years, because the average household has two to three mattresses.”
Krim: Mattress businesses do not need repeat purchase frequency to make money
“You can make a lot of money selling mattresses. You don't need frequency.”
Krim: Casper was the first company to brand the unboxing experience
“To my knowledge, we were the first to ever brand the unboxing experience, and so we put the stripes on the box on the exterior, and we put a tray on the interior.”
Krim: Organic YouTube unboxing videos were an early growth catalyst for Casper
“When we started looking at sources of traffic to our website, we started seeing a ton of traffic come from YouTube in our early days, and it ended up that the Casper unboxing experience was something that people love to film on their phone and love to post onl…”
Krim: Casper reached its month six sales forecast on day one
“40 mattresses is, like, 30,000 dollars worth of business. I mean, again, that, that was, like, what we were forecasting to do in month Six or seven and we did it in our first day.”
Krim: Amazon banned Casper's account for buying hundreds of backup airbeds
“Amazon canceled our account because they thought we were reselling them, which we weren't, but we were buying hundreds of these arrow beds just to help people sleep.”
Krim: Casper achieved $1 million in sales in 28 days
“We did a million dollars in our first 28 days.”
Krim: Casper operates with a gross profit margin above fifty percent
“We still have a high margin business, and it's a high margin category so, you know, you look today, we're north of a 50% gross profit margin Business, which is, is good and strong, and that's enough to build a defensible business.”
Krim: The killer app for Calm and Headspace is sleep, not meditation
“The folks like Calm and Headspace have gone on to build great businesses, and I think the killer application for those businesses is not meditation. I think it's sleep”
Krim: Dismissing the rapid influx of copycat mattress startups was a mistake
“It did, and it was way bigger of an onslaught of competition than, I think, certainly I could have ever imagined, and I think this is one of the things, looking back, that, you know, was a mistake on my part. I was kind of dismissive of competition in the earl…”
Krim: DTC mattress boom made online shopping more confusing than physical retail
“You know, I think the proliferation of mattress startups certainly got very competitive very quickly, and immediately buying a mattress online became even more overwhelming and confusing than buying a mattress offline.”
Krim: Multiple mattress brands are produced in shared contract factories
“In the mattress industry, a lot of manufacturing is done at contract manufacturers who will make foam or products for anyone in the industry. So it's not abnormal to see multiple brands being produced on the floor of any mattress factory.”
Krim: Casper sued review sites over undisclosed advertiser payments, not negative reviews
“There are some companies and some sites out there, especially at the time when we were litigating against this, that did not represent themselves as being paid by these advertisers, and they represented themselves as independent and unbiased, and that just was…”
Krim: Casper financed the Sleepopolis acquisition but had no editorial control
“They wanted to buy this site, and we talked to them about financing that acquisition so that they could operate it, and they had complete, independent editorial control, and they ran their business. We were just a financing partner for them.”
Krim: Target took a minority stake in Casper for commercial partnership
“And we said, if they want to make an investment and take a, you know, minority position in Casper, and if they want to help us More importantly than the investment, if they want to help us commercially, and the investment will help catalyze that, then great. T…”
Krim: Casper's 2020 IPO was driven by internal ambition, not VC pressure
“You know, we actually really didn't feel pressure from investors... It was really, I think, more self-imposed pressure to get public than anything.”
Krim: Casper faced post-WeWork public market backlash against unprofitable startups
“We were the first, I think, visible high profile company to go public post WeWork, which meant there was a ton of negative sentiment around companies that were investing capital into their business and around, you know, these, the startup And side of things.”