S-1 drops from @Casper - interesting positioning as a sleep economy business v a mattress business. Includes CPAP machines, medical diagnostics and pet sleep in that definition. Notes to follow
2/ The financials and growth don’t match with the picture of market size. Growth of only 20.2% YoY (nine months ended sept 2019). Increasing operating losses ($65M operating loss!).
3/ There’s merit to applying the Rule of 40 even to consumer businesses. At that low 20% growth rate, @casper should be profitable and showing increased operating leverage
4/ with a gross margin of 50% and sales and marketing consistent for two years at 36%, they’d need to add almost $500M in additional revenue to break even, even if you unrealistically assume no further increase in G&A
5/ So, as always, let’s try to lay out the bull case. Maybe their stores have airtight unit economics and drive down omnichannel sales & marketing cost significantly.
6/ Perhaps the importance of sleep for consumers continues as a macro trend. And @Casper uses equity to buy businesses like Aura and even some payor reimbursed products and services to own the sleep vertical
7/ what’s clear is they are never going to get to profitability selling more commoditized pillows and mattresses, without investing hundreds of millions of additional investor capital
8/ I’m struggling with businesses like @casper and @onemedical with slow growth(<30%) and increasing operating losses in the tens of millions. I don’t get it. If you have physical stores/clinics with great economics why not wait to file and have insiders pony up
9/ The risk is that consumer companies going out with tough competitive and financial profiles sour the market broadly for DTC business. I want to see more businesses like @peloton and less like this one
