Casper's IPO: fight or fright

Updated On: January 16, 2020
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Today, Casper haunts the IPO space and SmileDirectClub expands its market. Plus, knitters master their craft with subscription. 

 

 

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Are you a member of the "sleep economy"?

Casper may be a friendly ghost in some realms, but it’s also the leading player in what it calls “the sleep economy.”

And this mattress mogul’s recent IPO is supposedly losing some friends, but has apparently taught a lot of people a lot of things

We first must give the company credit for what it’s accomplished with scale and brand awareness in less than six years. But with that being said, there’s a lot not to like with Casper's unprofitability and its considerably questionable unit economics. Here are a few lessons we’re eyeing, from an article by Medium.

  • #1: Casper doesn’t consider itself just a mattress company, but instead the leading player in the “sleep economy,” which involves impressive market expansion into surprising categories like medical devices and services like sleep programming and counseling.
  • #2: Although we’ve touched on the retail apocalypse in length, physical stores seem to still be working for Casper, and it plans to triple down on brick-and-mortar retail over the next few years. However, true cash-on-cash payback is still unclear.
  • #3: On the flip side, Casper's lifetime value and customer acquisition cost look fairly weak despite it being first-purchase profitable. And as we know is true for SaaS, LTV:CAC ratio is your lifeblood for sustainability and growth, so D2C products as well must not stray far.
  • #4: Though Casper now sells through other retailers, D2C continues to dominate revenue. This has positive implications for Casper’s brand, but may limit revenue expansion via partnerships.

Just as Justine and Olivia Moore at Medium said, we too have our eyes on the public market’s reaction to this IPO, but aren’t expecting it to—and haven’t seen it—lean positively.

Will D2C brands make the case that they deserve to trade at a higher multiple than traditional retail companies? And how will trends of later stage D2C brands trickle down to early stage brands raising VC rounds?

We have a ton of resources on CAC, LTV, and expansion revenue for the SaaS and subscription space, which you can delve into here:

Mouth health for all

If you know me at all, you know I am a fiend for dental hygiene. So this next story, I couldn't help but feature.

SmileDirectClub, the company that offers popular teeth straightening aligners, has seen a 15% spike in its stock, as the 'club' decides to sell its gear straight to orthodontists and dentists, and not just direct to patients' doors. 

This is a smart move for their crew, in expanding its market and upping opportunity for revenue. It actually makes us wonder why they didn’t do it sooner. 

SmileDirectClub, which went public in September, will now become a direct competitor to Invisalign—who had largely cornered the market of selling removable aligners to patients through dentists and orthodontists. 

Invisalign has not sold as a D2C product, so this could be a one-up move for SmileDirectClub. We’ll be keeping our eye on this one—because as I always say, mouth health is your segway to whole health. 😬

 

Knitters know. (Or do quilters know best?)

The subscription club continues to heat up, with a lesser-known member: knitters

Back during its origination in November of 2014, knitting company PostStitch sought to recreate the feel and experience of a yarn store, during which shoppers are assisted in selecting a project and given guides to help them with the right needle size and tools, for example.

They wanted to “scratch the itch of helping people discover new yarns."

Today the company operates on a recurring subscription model available at three tiers to cater to varying budgets and knitting styles. 

"Whether you're a curious new knitter or have been knitting for years, our kits are designed to help you expand your craft."

PostStich Founders Megan Graddy and her mother Amy Rosenbaum got into the space when subscription was “kind of booming,” but now—we know it’s in full swing. And clearly, there’s no industry that’s an exception to this. 

 

Pricing Page Teardown: knitting vs. quilting


The quilting and knitting industries are a lot bigger than you think, which is why we do something a little different in this episode of Pricing Page Teardown—looking at how someone might go about capitalizing on these industries.

While services like Quilty Box and YarnYAY! exist already, there’s a huge opportunity for additional subscription box services. So here, Patrick and Peter talk through the willingness to pay data and feature preference, as well as some top-level stats that are sure to surprise you, to show just how important it is to not only understand your potential customer, but the industry as a whole.

 


And that’s a wrap for your January 16 subscription news. If you're not in the know already, head to recurnow.com to sign up for daily episodes with subscription news and resources.

If you have word to spread via the show, hit me up at abby@recurnow.com and we'll collaborate.

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