20VC Casper Founder Philip Krim on The Right Way To Think About Marketing Channel Diversification, When To Accept Strategic Investors & How To Successfully Build Out Your Exec Team



In this episode of the 20 Minutes VC, host Harry Stebbings interviews Philip Krim, the founder and CEO of Casper, a direct-to-consumer global sleep company that has revolutionized the mattress industry since its launch in 2014. Krim, a serial entrepreneur, discusses Casper's journey, including raising over $239 million from prominent investors, such as Leonardo DiCaprio, and the company's expansion into physical retail stores to complement its online presence. Krim emphasizes the importance of customer experience, product innovation, and strategic partnerships, like the one with Target, in driving Casper's success. He also highlights the challenges of scaling a complex business and the significance of hiring the right team, especially at the executive level, to maintain growth and prepare for a potential IPO. Casper's mission is to establish sleep as the third pillar of wellness, alongside diet and exercise, and to become a global sleep brand.

Summary Notes

Introduction to the Podcast Episode

  • Harry Stebings hosts Philip Krim, founder and CEO of Casper, on the 20 Minutes VC podcast.
  • Philip Krim is celebrated for creating a leading consumer product in the sleep industry.
  • Casper, launched in 2014, has raised over $239 million in funding.
  • Krim is a serial entrepreneur, starting his first business in his dorm room at the University of Texas.
  • Philip Krim has been featured in major publications and has won a TechCrunch Crunchy award.

"He's created one of the world's most successful consumer products of our day. And so I'm thrilled to welcome Philip Crim, founder and CEO at Casper, the global sleep company that launched in 2014 offering perfect mattresses directly to consumers."

Explanation: Harry Stebings introduces Philip Krim, emphasizing his success in creating Casper, a highly successful sleep company known for its direct-to-consumer mattress sales.

Philip Krim's Entrepreneurial Background

  • Philip Krim has always been drawn to entrepreneurship, starting from his college days.
  • He launched his first company as a sophomore at the University of Texas.
  • Krim's entrepreneurial journey continued with various ventures, leading to the founding of Casper.

"Personally though, I've always wanted to be in the startup entrepreneur side of the world, and this itch was something I started scratching back in college when I was a sophomore at the University of Texas."

Explanation: Philip Krim shares his longstanding interest in entrepreneurship, which began during his college years and led to his first company.

The Genesis of Casper

  • Casper was co-founded by Philip Krim and four others who met in a co-working space in New York City.
  • The co-founders shared a common belief in the importance of sleep and saw an opportunity to improve the mattress-buying experience.
  • The rise of sleep-tracking technology and new data on sleep's importance influenced their decision to start Casper.
  • Casper's goal was to offer a better way to purchase sleep products and improve overall sleep quality.
  • The company considers various factors that influence sleep, including bedding, temperature, and light.

"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."

Explanation: Philip Krim explains how the founding team of Casper aimed to revolutionize the sleep industry by offering a better mattress-buying experience and focusing on factors that contribute to good sleep.

Expansion of Casper Retail Stores

  • Casper plans to open 200 new stores despite the narrative of declining retail.
  • Philip Krim believes that successful retail is about exceeding customer expectations.
  • Casper's direct-to-consumer model was never intended to be digital-only.
  • The physical stores are designed to provide a unique experience and meet the needs of customers who prefer to interact with products in-person.
  • The success of existing Casper stores has led to the decision to expand to over 200 locations.

"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."

Explanation: Philip Krim discusses Casper's retail strategy, which focuses on creating an exceptional in-store experience for customers, aligning with their desire to physically engage with sleep products due to their significant impact on life quality.

Retail vs. Online Business Models

  • Retail and online businesses have different growth drivers and P&L structures.
  • Online businesses require marketing spend for customer acquisition, while retail stores use the physical location for brand building and customer acquisition.
  • Krim notes that the retail stores positively impact the business's growth and brand awareness.
  • The presence of Casper stores in a market leads to increased growth in that area.

"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."

Explanation: Philip Krim compares the economic models of retail and online businesses, highlighting how retail stores contribute to customer acquisition and brand building without the marketing costs associated with online traffic acquisition.

Retail Store Impact on Online Markets

  • Retail stores have been effective in driving faster market growth compared to markets without stores.
  • Stores serve as an acquisition tool, providing a tangible experience for online shoppers.
  • Customers have shown interest in experiencing products firsthand since the company's launch.
  • The vision for stores is to create education, community, and a destination for sleep wellness.
  • Casper aims to position sleep as the third pillar of wellness, alongside exercise and healthy eating.

"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."

This quote emphasizes the role of retail stores in bridging the gap between online shopping and physical product interaction, enhancing customer education and brand philosophy communication.

"And we're really excited to have, I think, locked down a vision for what the stores could do to really create a sense of education, a sense of community, a sense of destination for sleep as wellness."

The quote outlines the strategic vision for retail stores, highlighting their potential to foster education, community, and a focus on sleep wellness, which is central to Casper's brand mission.

Concerns and Challenges with Retail Expansion

  • The complexity of managing multiple geographies, channels of distribution, and partnerships is a significant concern.
  • The key is to navigate this complexity without causing consumer confusion.
  • Success in this area could lead to a new generation of seamless retail experiences.

"I think the element that I'm probably most concerned about is just the level of complexity it brings."

This quote captures the speaker's concern about the challenges that come with expanding the retail footprint and the complexity it introduces to the business model.

"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."

Here, the speaker highlights the importance of executing the retail strategy correctly to avoid damaging the brand and the business through consumer confusion.

Product Line Expansion and Market Attractiveness

  • The mattress business is a stable, predictable industry with strong consumer demand.
  • Casper's expansion into a full range of sleep products is part of its vision to be a global sleep brand.
  • The company has invested in product innovation to ensure all products contribute to a better night's sleep.
  • Casper Labs is a dedicated team working on next-generation sleep products.

"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."

This quote explains the holistic approach Casper takes towards sleep, emphasizing the importance of various factors beyond just the mattress.

"We want to be the one stop shop, the end to end brand about helping people get a better night of sleep."

The speaker's statement reflects Casper's goal to provide a comprehensive range of products that collectively enhance sleep quality, positioning the brand as an all-encompassing sleep solution.

Differentiation and Innovation in Sleep Products

  • Casper differentiates itself through product innovation, such as developing proprietary weaves for sheets and cooling pillow designs.
  • The brand's commitment to innovation is seen as a key factor in establishing market leadership.
  • Casper's product quality and innovation have been recognized by Consumer Reports and other entities.

"We really have an amazing group of truly talented scientists and engineers and designers."

This quote underscores the investment in human capital and expertise that Casper has made to foster innovation and product development.

"Our mattresses are consistently rated the best mattresses out there."

The speaker points out the recognition Casper products have received, which serves to validate their approach to product quality and differentiation.

Competitive Landscape and Market Positioning

  • Casper has observed competitors losing steam and attributes its own growth to diversification in customer acquisition and product quality.
  • The online mattress segment continues to grow, with Casper maintaining its market share leadership.
  • Real product quality and innovation take time to be recognized by consumers, contributing to Casper's strong position.

"We were never overly reliant on just Facebook or just Google."

This quote indicates Casper's strategic approach to diversifying its marketing and customer acquisition channels to avoid over-dependence on any single platform.

"It's become a meaningful part of the overall industry and we continue to be the number one market share leader in that space."

The speaker is highlighting Casper's leading position in the online mattress segment and the overall significance of this market within the industry.

Retail Expansion and Market Share

  • Casper is focused on expanding its offline presence through retail stores and partnerships.
  • The goal is to take a significant share of the market and drive change in the category.

"And we're going to continue to take meaningful share there. And I think that sets us up to really be the brand that is going to continue to drive change in this category, just as we've done over the last four plus years."

The quote emphasizes Casper's commitment to expanding its market share and influence within the retail space, aiming to be a leading brand that drives innovation and change in their industry.

Customer Acquisition and Advertising Strategy

  • The balance between organic and paid customer acquisition varies by business type, category, and lifecycle stage.
  • Initially, Casper relied on word of mouth, press, and content, which was effective without paid advertising.
  • As the business scales, Casper invests in brand building and educating various segments of the market.
  • The decision to invest in paid advertising is influenced by the company's ambition and the desire to be a significant market player.

"For Casper specifically, we want to be a material market share owner of this category, 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."

The quote outlines Casper's strategy of investing in advertising to educate consumers and capture a significant portion of the market, highlighting the importance of investment in line with the company's growth and market share ambitions.

Strategic Investment and Partnership with Target

  • Strategic investments should be carefully considered to ensure alignment with the company's goals.
  • Casper's partnership with Target was based on shared vision and mutual benefits in the wellness landscape.
  • It is important to understand the strategic investor's motivations, which may differ from those of VC firms.
  • A successful strategic partnership requires aligned interests and motivations.

"We're very lucky to say that target has been the perfect partner for us. They saw the vision of what Casper wants to create in the world."

The quote reflects the positive outcome of Casper's strategic partnership with Target, indicating that the alignment of visions between the two companies has been beneficial.

Advice on Accepting Strategic Money

  • Founders should understand the motivations behind strategic investments, as they may not be financially driven.
  • It is crucial to establish whether the strategic investor's goals align with the company's interests.
  • Proper agreements and alignment of interests are essential to avoid potential pitfalls of strategic investments.

"So understanding what the motivation is and then what they're looking to solve with the investment, I think is really important."

The quote advises founders to thoroughly understand the strategic investor's motivations and align them with the company's goals to ensure a successful partnership.

Timing and Size of Investment Rounds

  • Deciding when to take on a large investment depends on the company's lifecycle, product-market fit, and founder vision.
  • Casper's large round of investment was timed to accelerate international expansion, product development, and brand building.
  • The right amount of capital at the right time is crucial; too much too early or too little too late can be risky.

"For us, it really was a perfect alignment with where the business was and what the lifecycle was and our ambitions to build a very large company."

The quote highlights the strategic timing of Casper's large investment round, which was aligned with the company's stage of development and growth ambitions.

Professionalization of the C-Suite

  • The addition of a CFO like Greg McFarland is seen as a significant step for Casper.
  • A CFO with extensive experience can help with processes, scaling, and preparing for an IPO.
  • The timing of such a hire is a balance between finding the right candidate quickly and waiting for the ideal fit.

"Greg has had an amazing career at really Fortune 500 companies... And Greg has really helped us think about what are the right processes, what are the right ways to continue to build this business."

The quote expresses the positive impact of hiring an experienced CFO in terms of operational processes and strategic planning for growth and potential IPO readiness.

Reflection on Hiring Practices

  • In hindsight, hiring key leadership positions earlier in the company's journey could have been beneficial.
  • The decision to hire is a balance between speed and finding the right candidate.
  • The leadership team plays a critical role in scaling the business effectively.

"I absolutely wish I had hired Greg and almost all of my leadership team earlier than when we know the trade off is always at the time."

The quote reflects on the desire to have brought on leadership team members earlier, acknowledging the trade-offs involved in the hiring process.

Hiring the Right CFO for Casper

  • Casper was deliberate in their search for a CFO, seeking a specific skill set and cultural fit.
  • Greg was chosen as the CFO because he was a perfect fit and had a significant impact across the business.
  • The importance of starting the executive search early is emphasized.

"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."

This quote highlights the careful and specific approach Casper took in hiring their CFO, underscoring the importance of aligning with the company's vision and the extensive impact the right CFO can have on the business.

CEO's Role in Management Upscaling and Capitalization

  • Building an executive team for scalability and ensuring proper capitalization are seen as core CEO responsibilities.
  • Time investment in executive team searches is crucial for cultural and skill set alignment.
  • Upscaling management and securing aligned investors are vital for high-growth businesses.

"Certainly building the executive team that allows the business to scale. I think the other bucket is really making sure the business is capitalized for the business plan that you have in mind."

This quote encapsulates the dual focus of a CEO on building a strong executive team and ensuring the business has the financial resources to execute its business plan, both of which are essential for scaling.

Quick Fire Round: Mottos, Lessons, and Fundraising

  • Philip Krim often reminds himself to work with the resources available at the moment.
  • Patience in hiring and selecting investors aligns with long-term vision and cultural fit.
  • Prioritizing the right investors over the highest valuation is a key fundraising strategy.
  • Maintaining composure and rationality in crisis situations is part of the company culture.

"You go to war with the army you have, not the army you want."

This quote reflects the pragmatic approach to entrepreneurship, emphasizing the importance of making the best out of the current situation while striving for improvement.

Philip's Book Recommendations and Personal Insights

  • Philip is currently reading the Elizabeth Holmes story and finds it shocking.
  • He previously read a biography about Elon Musk, whom he admires for his vision and entrepreneurship.

"I read that, and then before that, I think I read the Elon Musk book, which is amazing."

This quote shows Philip's interest in stories of other entrepreneurs, both as cautionary tales and as sources of inspiration.

Future Vision for Casper and Philip

  • The goal for the next five years is to establish Casper as a global brand, akin to Nike or Under Armour.
  • The focus will be on expanding product accessibility and improving sleep quality worldwide.

"I want to build. And I believe Casper will become a truly global brand."

This quote outlines the ambitious plans for Casper's expansion and brand establishment on a global scale, indicating a strategic focus on growth and international presence.

Acknowledgments and Partnerships

  • Appreciation is expressed for the time given by Philip and the introductions provided by investors.
  • Shoutouts to Bigcommerce and Lattice for their support and services in the ecommerce and people management spaces.

"I do want to say a huge thank you to him for giving up the time today to be on the show."

This quote reflects gratitude towards Philip for participating in the podcast and acknowledges the value of his insights for the audience.

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