Casper

To Taryn Laeben, Casper’s retailing chief—who joined the company last year after previously having run Kate Spade’s retail operations—that degree of openness is a major strength. “They’re so different from each other, but there’s really no ego in the founding team,” she says. “If you come to a meeting, there’s no culture of holding back because there’s a founder in the room. There isn’t some private place where debates happen. It’s an open community.”

Chapin, by virtue of working in San Francisco and joining the company mid-career, has an interesting perspective on his colleagues. “This sounds really terrible, but I don’t have that much in common with the other guys,” he says. “I don’t know if I would be friends with them if it wasn’t for Casper, other than the one guy [Parikh] that I knew before. I love spending time with them, but they’re very different from the friends I mostly spend time with.” The secret to making it work, all five agree, is trust and deference to the others’ abilities in their domains. “If I’m debating a branding thing with Luke, like, he’s going to own the branding,” Chapin says. “I can’t force my opinion down his throat. It’s about respect—not just respecting the people but their areas of expertise.”

When Chapin originally linked up with his cofounders in 2013, he had no idea how to make a mattress. But when Parikh, who had briefly gone to medical school with Chapin’s now-fiancée, reached out, he sold the idea so well that Chapin was inspired to give it a try. At Ideo, Chapin had worked on everything from car seats to toilets. One of his assignments there, years ago, was a deep-dive innovation study for one of the handful of dominant mattress manufacturers, during which he got to spend time in their R&D facility. What he saw left an impression. “I was like, Holy crap, there is nothing new here,” he recalls. “We also looked at the business-model side, did shop-alongs in retail stores. It just seemed like a broken industry.”

Around the same time, Krim was coming to a similar conclusion. Then a college student at the University of Texas at Austin, he was already entrepreneurial. He had launched an early e-commerce business out of his dorm room, selling everything from blinds to futons—basically anything that could be purchased wholesale from a supplier and shipped directly from the factory to the customer. One of those products, foam mattresses, turned out to have a particularly high profit margin. “That industry was always very behind on embracing technology and anything new,” says the CEO, who has a more buttoned-down style than his colleagues.

Eventually Krim made his way to New York, where he launched a company helping local businesses advertise online, operating out of a coworking space he shared with a trio of younger guys who all went to Brown together, and who continue, Chapin says, to have a unique bond: Parikh, Flateman, and Sherwin. At the time, they were trying to get a startup of their own off the ground (which involved pairing people who had things to sell with online influencers who would promote the products and get a cut). Flateman, who studied music as an undergrad, had taught himself to code on the side. Parikh had just dropped out of medical school after his first year, much to the dismay of his physician father, and was Sherwin’s roommate. The pair even slept on an air mattress together for a while, in an apartment they shared with three other guys. “It was the classic story,” Parikh says. “Move to New York, have no money, share a room, that kind of stuff.”

One day, Parikh heard a friend of Krim’s jokingly refer to him as the “mattress mogul.” “I was like, ‘Why would he call you that?’ ” Parikh says. “And he told us the story about how he used to sell beds online, and the industry is a total racket.” They were all keenly interested in the emerging class of e-commerce firms like Warby Parker, Harry’s razors, and Bonobos. “Companies that came along and said, ‘Hey, there’s a broken category’ and were creating the same product at a much lower price,” says Parikh.

Given that neither of their startups was exactly thriving, the foursome began looking into the possibility of selling mattresses direct to customers. Almost immediately, the idea felt right to the entire crew. Chapin and Parikh rented a space in Providence, Rhode Island, and started testing prototypes. The company raised $1.6 million in seed capital from a handful of investment firms in early 2014 and officially launched soon after. The timing was fortuitous. Sleep was becoming the hot new thing, with sales of sleep trackers beginning to take off and Arianna Huffington promoting a prominent campaign around the importance of eight hours of high-quality slumber. “There was a tailwind around sleep,” says Sherwin. “Entering the mattress industry was clearly a really smart proposition relative to what we were doing before.”

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On the same day as the balloon-man party, Chapin’s West Coast team had its own thirdanniversary celebration, and the mood was decidedly more low-key—a trip to a make-yourown-ceramics spot, a few pizzas, some beers at a dive bar. As Casper plots its next phase, some healthy tension has developed between its two coastal operations: the sales-driven mothership in New York and the design-and-engineeringfocused satellite in San Francisco.

Chapin’s top priority is to nail the products— something now expected by the passionate followers of the brand that Casper has carefully built. When developing its $125-and-up dog bed, which Casper released last year to strong sales and a jolt of media buzz, Chapin’s team went through dozens of

prototypes, each rigorously assessed by actual dogs. (Casper only semi-jokingly refers to the process as “canine-centered design.”) Early this summer, the company rolled out its eighth major item, a $250-plus duck-down duvet, after more than a year of iteration and testing. Chapin experimented with all kinds of synthetic insulation, before settling on down as the most breathable, comfortable, temperature-regulating solution. The shell is made of special featherweight cotton, making the entire thing more cloudlike, and it’s stitched together with baffles inspired by winter puffer coats, keeping the down from clumping.

Meanwhile, in New York, everyone is pushing to amp up the pace. “We’re always wanting to launch stuff,” says Parikh. “We have customers calling every day saying, ‘I want this, I want this, I want this!’ [Chapin] is like, ‘I hear you, and I want the same thing, but I’m not going to launch this product until it is absolutely perfect.’ ”

This summer, Casper opened a new R&D facility in San Francisco, which now allows Chapin’s team to both move faster and push the company forward in several directions at once. They can experiment more with new materials and forms in-house, discovering whether production might be viable without requiring a vendor partner to participate in the research phase. There is also now a team focusing entirely on packaging design, which used to involve a protracted process of sending specs to a vendor, getting samples, and tweaking them over the course of a couple months. Today, using in-house prototyping, “our designers can design it, print it, check it,” Chapin says. “What took six or eight weeks now takes three days.” Casper is also tapping an army of 30,000 fans around the world, who have volunteered to sign NDAS and help with the testing.

Some of Chapin’s big focuses at the moment are the kinds of tech-infused products that he refers to as “connected sleep.” The Casper team has been looking more carefully at what might actually help people get better rest. They have come up with three distinct areas: How do you draw someone into bed? (By, say, making it cozy and warm in the winter.) How do you keep people asleep? (By, for instance, altering the microclimate beneath the covers.) And how do you ease people into the day? (By finding ways to make the waking phase more pleasant.)

Chapin pulls up some images on his Macbook of a sleep lab that Casper had created in a spare conference room. In one, a bed is strewn with several soft, round objects, which turn out to be connected speakers that form a 3-D sonic environment. “The team created a five-minute wakeup experience where you hear birds chirping over here and then wind chimes over there,” he says. “It was a really nice way to wake up.” Other images show heated and cooled pillows, ambient lighting effects, even a little cabinet he calls a “bedroom toaster” that can warm your pajamas in the winter. “Even though I’m obviously a fan of the products we make, these will create more delightful experiences, if we get them right,” he says. “Or we could totally fail and do a crappy job with them, and then [we] probably did brand damage. It’s all in the details of how we execute.”

Chapin has also been spending a lot of time thinking about a different question that could have even more impact: Should Casper launch a second mattress model? From the start, Chapin has been tinkering with the company’s core mattress product, working with a polymer chemist to test sandwiches of various foams and other adjustments. Quietly, he has refined the mattress as he learns (for example, the foam was refined after early iterations firmed up too much in colder climates). It’s a clever design: Layers of memory foam provide the bulk of the support, while a proprietary latex-like top layer keeps the bed cool and provides bounce for what the company’s initial marketing referred to as “indoor sports.”

All of this experimentation hasn’t just made the core product stronger: It has helped Chapin conclude that there might well be room for a second, more technologically advanced mattress to join Casper’s product line. “The testing we’re doing right now, it’s really promising,” he says. “We have to shake out what it’s going to cost us, because some of the things we’re looking at are a little spendy.” He describes a mattress unlike anything currently on the market, built around a stiff endoskeleton similar to a really good shoe insole. “How do you play with support of the mattress in different zones, like under the hips, under the shoulders?” he says. “You can’t add a lot of that support to the top of the mattress; you have to put it deeper down. And that requires some new materials and manufacturing methods that aren’t in this industry. So we’re having to create some new things and then port some stuff over [from] other industries.”

When Casper launched, one of the core as-

sumptions was that the products would mostly appeal to tech-inclined millennials, the group most comfortable with making major purchases online. That turned out to be wrong: Casper’s demographics aren’t much different from those of the mattress industry as a whole—its customers come from every age group and every part of the country. But as much progress as Casper has made in persuading Americans to try out their concept, 90% of shoppers still buy mattresses from a physical store, Krim says.

In May, Casper—which has begun making tentative plans for an Ipo—announced a new partnership with Target, which invested $75 million in the company amid reports that it had offered to acquire Casper outright for $1 billion. (The investment is part of a larger funding round worth a reported $170 million.) The deal has put its non-mattress products in 1,200 Target stores nationwide, reaching huge numbers of potential new customers. “The idea of getting in front of so many demographic areas that have never heard of us?” says Parikh. “It’s just so compelling.” At the same time, Casper’s own site, which is overseen by Flateman, continues to evolve. Customers in several cities, including New York and Los Angeles, can now order a mattress and often get it delivered in not much more time than it takes to get a pizza: 90 minutes or less.

These moves, the founders hope, will both broaden and better define the Casper brand, and will also help it stay ahead of the dozens of companies it has inspired. Competition is a major worry, with both Big Mattress and other startups angling for Casper’s customers. “The reason there are so many look-alikes out there is that it’s an industry with a very low cost of entry,” says mattress-industry analyst Jerry Epperson Jr., a managing director of the investment firm Mann, Armistead & Epperson. “But Casper raised money early and has raised the most, and now that it has Target as a big brother it has a real competitive advantage. I don’t see any other [online mattress] that’s going to come up and become a more recognizable brand.” Still, there’s quite a bit of pressure to stay ahead, which is why the New York founders are so keen to push the California product-development operation to move faster.

No matter how much they might debate with each other, all five founders do strongly agree about one thing: They aren’t going to break up the band anytime soon. Krim won’t talk specifically about the reported billion-dollar Target offer, but he says that there have been any number of parties seriously interested in acquiring the company—and that in no case have the talks gotten very far. “It’s never been of interest because we’re still very much in building mode,” he says. “We think we have much bigger, brighter days ahead of us. We view what we’re doing as building something that will be great for decades to come.”

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