Sleeping unsoundly: Mattress-in-a-box company Casper hasn't made its business model work

11/16/21 7:00PM

"Mattress-in-a-box" company Casper announced this week that it was being acquired, taking the company private less than two years after the company's IPO. The deal values Casper somewhere around $300m, way down on the frothy $1.1bn valuation from 2 years ago.

‍Sleeping unsoundly

‍Casper was one of the most successful early direct-to-consumer businesses, selling thousands of mattresses and sleep accessories since the company was founded in 2014. The product, by all accounts, was pretty good — and Casper got in front of would-be-buyers with clever subway ads, loads of podcast airtime and a lot of marketing spend.

But, as Casper scaled its revenue from tens of millions to hundreds of millions, one thing never followed: profits. Casper's filings reveal a consistent history of operating losses, with the company's generous returns policy and aggressive marketing spend both burning millions each year.

Cutting out the middleman, and going straight to the consumer, is extremely tempting. For huge brands like Nike, which everyone already knows, it makes a lot of sense. But if you need to get the word out? That's going to keep costing you. Case in point; Casper spent $157m just on sales and marketing last year, almost 32% of its revenue.

Hyunsoo Rim

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JetBlue is raising its bag fees as fuel costs squeeze airlines

JetBlue will reportedly hike its bag fees, as the cost of jet fuel continues to climb amid the war in Iran. It’s the latest example of carriers finding ways to push rising costs onto travelers.

Last week, United Airlines CEO Scott Kirby said that if fuel prices remain elevated, fares would need to rise another 20% for his airline to break even this year.

As CNBC reported, when one airline raises fees, others tend to follow.

Earlier this month, JetBlue hiked its first-quarter outlook for operating revenue per seat mile to between 5% and 7%, saying that strong Q1 demand helped “partially offset additional expenses realized from operational disruptions and rising fuel costs.” Now, the carrier appears to be making moves to further boost revenue to offset those costs.

Earlier on Monday, JetBlue rival Alaska Air lowered its Q1 profit forecast. The refining margins for the carrier’s cheapest fuel option — sourced from Singapore and representing about 20% of Alaska’s overall supply — have spiked 400% since February.

JetBlue did not immediately respond to a request for comment.