Mastering Market Timing: Neil Parikh’s Blueprint for Success

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This week on the podcast we have a fascinating interview with entrepreneur and co founder of Casper Mattresses, Neal Parikh about how to build a successful brand and business. This interview was recorded earlier this year at the Hudson Valley Ideas Festival and is moderated by friend of the podcast Carly Reilly. Hope you enjoy it.

I think often starting a business is like putting up a kite and if there are really powerful wins that you can catch that are already up there, your business can be way easier, right? And those wins are the market. Those wins are like the idea that like people want this thing where like the world is kind of like probably like ready for something and like you've picked up on that thing and maybe other people are picking up on the same thing too.

I'm sure everybody here is familiar with Casper Mattress or has heard an ad for Casper Mattress or may even have a Casper Mattress. But I think what is so interesting and what folks may not realize is just the degree to which y' all really redefined the mattress category with Casper in a number of different ways, from distribution to marketing. Like everything y' all did was frankly different than how the mattress industry had run previously. So I'd love maybe to just have you give folks an overview of when you were starting Casper how it came to be and how you thought about reinventing the model from the top down and just really explaining that for folks.

Well, first of all, thanks for having me and excited to be here. So. Well, the funny thing about the mattress industry, maybe 10 or 15 years ago.

Not a sentence I would have expected to hear.

I didn't think I was gonna say that either. And this is not a category that I ever thought I was gonna get into. So my story was I was in medical school before and I was supposed to be a doctor. And about a year in, I decided I hated it. And I was like, I'm going to go do something else. But I didn't want to tell my parents the truth. So I told them I'm going to take a year off and I'm going to move to New York and I'm going to go try to start some fun things with my friends from college. So we tried a bunch of different projects, but one day I happened to be sitting next to in a co working space next to somebody who was telling me that he used to sell mattresses online from his dorm room. I'm like, that's a dumb idea. Who would ever buy a mattress on the Internet? Like, don't you have to try it? You know? But we spent a bunch of time together. My dad's actually a sleep doctor. And we realized that there was this opportunity because back then you'd basically have to go into a store and negotiate with somebody, right? It was kind of like buying a used car. You'd often go in and, you know, and the mattress companies, they weren't exactly like your best friends, you know, they would sell the exact same product in three different stores and have different labels and tags and stuff on them, but basically it's the same product. And then they'd give you that lowest price guarantee. You can't find this anywhere else because you literally can't find this anywhere else with the same tag. And so there's an oligopoly that just was a crappy customer experience. But other than mattresses, we realized, okay, there's an opportunity here to go direct to consumer, build a much better product and service from day one. But beyond that, our real interest was how could we create a brand that's focused on sleep more broadly? Because, you know, we were exiting that era of like, let's work as much as possible to the bone. You know, wellness is becoming a lot more popular. We're drinking green juice, we're thinking about our sleep.

Was this the Ariana Huffington era there, or did she come a little later?

She came a little bit later, yeah. But it was all around the same time period where we were. I think people were finally saying we should take care of ourselves. Right. And so we realized that beyond a mattress, there was a much bigger opportunity around how can we create a brand that's focused on sleep and sell many different products and services that kind of inspire people to get excited about sleeping better?

And so talk about. I want to talk a couple of things. So first, it was somewhat revelatory because, again, you were going direct to consumer. You were selling online. I mean, did that work immediately or did you have to get the customer, the consumer acclimated to the idea of buying a mattress online? Was the appetite there? Like, yeah.

How was that? We got very lucky. So, you know, April 22, 2014, just almost exactly 10 years ago, we launched and we thought we'd only bought like, 30 beds because we were like, okay, who's going to buy this stuff on the Internet? And when we launched on that day, we ended up selling like $100,000 of product in the first day and like a million dollars in the first month and like $100 million worth in the first, you know, full year of business.

Oh, my gosh.

And honestly, we were not prepared for that. And so it was partly engineered in the sense that we did do quite a lot of marketing and PR and getting people excited by it. But really what it was a testament to is that I think people were so frustrated by the previous way of doing business. Number two, we had very simple messaging. Our whole pitch was like, you don't need 27 different models. Right. My co founder had worked at IDEO, the design firm. They had done a bunch of work for other mattress companies. And what we realized is that when you're on a mattress showroom, a lot of the reason they have or just any physical store, oftentimes the reason they have many different models is because the more units you have on the floor, the greater the likelihood that somebody's gonna pick your product versus somebody else's. It's not necessarily that. It's just like the best product for everybody. So we started interviewing people and doing our research, and we realized when we gave different beds to different people, almost everybody gravitated towards the exact same model, which is like a medium firm mattress that had this particular makeup. And you're like, oh, that's funny. People tell us you need 18 different configurations, but actually, if you don't tell somebody what they're getting, they all Gravitate towards the same thing. Why? Because actually, it turns out, generally speaking, a medium firm mattress, memory foam and latex and stuff is a great product for almost everybody. So we said, okay, what if we just launch one product, right? There's only six different sizes. We're not going to have firm and soft and other things. And so I think the point is, like, we just really tried to simplify the experience. And the last thing we did is we invented this concept of try it at your house. Like, because we didn't have showrooms, we said, okay, we'll give you 40 days to try this product at home. If you don't like it, send it back. And the thing is that actually sleeping on a product is the best way to decide if you like it. And so we sent it to people and I think that we basically tried to build a company that was really focused on customer service from day one.

Orient us. What year did you. Was it founded?

2014.

Okay, so. And maybe for the last little note, we'll talk about here as we talk about Casper and what you guys did so incredibly well, let's talk about the marketing. You know, I think of it as like a podcast company. And I don't know if it was like an, if you would consider it an early example of a company that figured out podcasts were an amazing way to sell certain products. But how did you guys approach marketing and why did it work so well?

So I think in every moment in time, if you want to get the word out about what you're doing, you have to think about where are we going to find customers that have a product market mindset fit with what we're offering. And two, you realistically just have to figure out arbitrage. And what that means is that you have to have a sufficiently high conversion rate and low price point of entry into the marketing to get the math to work. Otherwise you're going to get hosed. And the thing that most people didn't realize is that back then, in 2014, maybe before we get to podcasts, I'll talk about the subway.

Oh, great. Yeah.

Have you ridden? Have you guys been on the New York City subways at some point in your Life? Okay, so 2012, 13, 14, nobody advertised in the subways. Okay? The people advertising the subways were like the pimple popping dent, you know, the dermatologist or whatever, Dr. Zizmore. I mean, it was like abysmal what was going on in there. But what we realized is, okay, what if we actually did something really cool where we Took over the whole train. And we made, like, puzzles and games and, like, things, because, like, you're stuck on this thing for half an hour if you're commuting, we might as well make it a fun experience. And so we negotiated with the mta, and we said, okay, we're gonna buy half of the whole train car, and we're gonna put up this crazy advertising. And they were like, yeah, okay, nobody else is advertising. You can do whatever you want. And so we got these really cheap rates where we would start experimenting, and then people. Then we realized, oh, interesting, people like these things. And so we started kind of getting crazier and crazier with some of the advertising.

How did you know people were liking them? Was that in there? When they would order, they would say online, they saw it on a subway ad.

Yeah, and then we'd put, like, a little promo code that says, you know, use code subway for $50 off or something. Now, the thing is, we were a bunch of math nerds. And so part of the reason when you see these promotional codes everywhere, it's partly because you want to give the customer a discount, but really it's because we have a bunch of spreadsheets on the back end saying, okay, where did you hear about this? What's working? And where should we keep spending money? So the point was that subways were early. And then once we realized the subways, we're like, oh, what else do people listen to? Well, before we actually got to podcasts, it was radio. Now, the thing is that we were, like, a direct consumer company. I had not listened to the radio in a long time, but we realized is that there's amazing radio hosts all across America, and when they do endorsement advertising, which is like, you know, they get on and they talk about if they really like a product. So we started seeding some of that, and it did remarkably well. And it was also super cheap because startups were not advertising on the radio in Oregon. You know, like, we just happened to figure out these. These niche opportunities. And so a lot of it was really thinking about how can you get outside of the box to get the math to work and then also do brand activations that are really interesting and fun. Like, we did a partnership with Uber in the early days where we built these trucks, and in the Uber app, you can call one of our, like, mattress mobiles that would, like, come to your house, and then you could go take a nap inside of it, you know, and it was, like, a fun experience. You could.

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You know, it's so easy, I think sometimes to look in hindsight and it's like, oh, yeah, well done. Like, all that worked. And there was this blue sky in some ways for y' all to go and play in, and you clearly had the right product and in the right moment. Do you see that kind of blue space right now? Because, you know, in terms of opportunities for entrepreneurs to market or advertise or.

Yeah, I think there are always blue. Blue sky.

I know. I don't know if that's. Is this a real term?

Yeah, I think it's blue sky. Yeah, I think there always are. Right. The question is, so if you have a business right now, a lot of the challenges are often like, where do you find your customers? Right. And the easy thing that Facebook and TikTok and whatever all these social media channels have told you is, well, just advertise on our platform, right? And you'll go and find those customers. But the reality is, like, there's not that many businesses that have gotten that to work because they're so efficiently priced that they charge you, generally speaking, the highest possible rate. And because you're bidding in a marketplace full of lots of other people. Right. It's not just like the amount of customer acquisition costs you're going to pay, it's whatever else other people are willing to pay to get those same eyeballs. And so I think you just have to be creative. Right. I think that the most interesting stuff I'm seeing right now is often people who are acquiring customers in person, people who are building apps and finding novel ways to get stuff to people, people that are using Influencers in different ways. People that are a big thing right now. Kind of like what you were doing with your podcast is owned and operated media, which is like, what if we actually shortcut all the big advertisers and we just create our own content platform on YouTube or our own, you know, podcast or whatever and actually get, you know, customers in the door that way rather than having to pay the big platforms. And so I think you just have to be creative that that's not to say that they don't have a place like, I think what's remarkable is if you want to test an idea today and you're like, I have an idea for this concept, you can go home tonight and using AI, you can make an advertisement and you could launch it on Facebook and you can get a sense for $1,000 if there's interest or not. And I think that is amazing. You could test so many ideas, but once you figure out that there's an idea, you might want to think about other ways of scaling that business.

Yeah, I think that's actually something that's worth doubling down on a little bit or double clicking on. I've worked a couple times with Y Combinator folks and it is always like, how do you test the market in the fastest way possible? So no product, no nothing. Just put an ad up and see if people are clicking on it and are therefore interested in the product and then engineer the product later if, if you're seeing that there's that interest.

Totally. And the thing is, you know, I could see it going either way. Right. There are. Going back to the early days of Casper, there was so much pressure around, like, wanting to do scientific marketing, like, should we a B test for advertising? Should we, you know, should the brand colors be purple or blue or white? Well, what if we try 16 variants and just, you know, see which one clicks? And the reality is a lot of it we went with our gut because you can ab test everything. But I think taste is really important and you have to put your best foot forward on something. And so as it connects to what you were just talking about is that I think there's a time and place for both. If you have an idea, it's really valuable to test and sometimes build that funnel and think to yourself like, huh, actually a lot of people are clicking on this messaging. Maybe there's something there. Right. And that's amazing. But I also think that you have to kind of sit and do the hard work of sitting with the discomfort of figuring it out on your own first. Right. Around what's my best first point of view on where I should start? And I think that's something that we could talk about AI and stuff later. But AI is a good generative tool for brainstorming. But I actually think humans are really good at taste and having that first place.

To start, I want to talk about one fun early Casper story that I think I heard around. You talked about. There was all this demand that immediately. That very much outpaced Yalls expectations and sort of what you did in the early days when you realized we don't have enough product for all the demand.

Yeah. So the first two or three years, we were consistently always out of stock. And that's a good problem to have, of course. But the problem actually was that, like, people were just always pissed at us. Because the funny thing about the mattress category is that, again, you don't know.

Anything about the mattress category.

Yeah, it's a sleepy category. You know, it's. But it's. You don't buy the product. Okay. So in my head, I'm thinking, like, nobody needs these. You don't buy a mattress the same day. Right. Like, you're obviously buying this thing a week or a month ahead of time. Everybody buys it at the last minute. Okay. Nobody is planning ahead of time. Like, it's almost always like, I'm moving. I've already moved into my new house, or I've left somebody else's house and I'm moving into a new place. And then you think to yourself, I need a bed. How am I gonna sleep tonight? So you go to the mattress store and you're like, I need something right now. Okay. So now fast forward to the Casper experience. So we ended up launching same day delivery in a bunch of cities, which was great. And actually same day delivery at the beginning, this is an example of hacking it. We didn't have a same day delivery service. We just put on our website, like, call us if you want same day delivery. And then one of us would just jump in an Uber with the mattress and drop it off at your house. But we made it seem like it was a much more sophisticated enterprise. It was actually just UberX and like, us. And if we got to their house. And this actually happened once, there was a reporter for GQ and he had ordered a mattress, and I'm thinking he wasn't gonna write about it, but I was like, okay, if I'm gonna drop it off to this guy's house, I better, like, do it myself and have a really good experience so I get to his house, and he lives in a six story walk up. And this mattress is 80 pounds. And I'm like, oh, man, this guy better write a good story about us. But so I think it's all about that experimentation and listening to your customers and actually figuring out what it was. Okay, so sorry. No, you go. All right. So then finally what ended up happening is we ended up realizing and we kind of realized, like, we knew we wanted to have great customer service up front, but we learned along the way the things that kind of create that. Right. So we had a little button at the bottom that says chat with the founders. And what would happen is you could chat and you could essentially talk to us because we didn't have customer service people. It was just us. And it would, like ring our. He could talk to us. So all the time, people would start calling in or chatting with us and talking about their problems, and we'd hear these crazy stories they would have. And that's when we realized, wow, everybody doesn't have a place to sleep. And so if we were delayed on shipping them a mattress, we said, okay, you know what? As a policy, we're just gonna ship you an airbed. And so if we were delayed by three or four or five days or a week or something, we'd send you an airbed. So how do we send you airbeds? We got an Amazon prime account and we would mail people airbeds from Amazon. Now the problem is we had so many delayed mattresses that Amazon thought we were reselling these airbeds and kept shutting off our accounts because they were like, why are they ordering hundreds of airbeds to send to people? And so, yeah, we had to do all kinds of crazy things in the early days, but it set a culture internally of, like, always going above and beyond because people that are buying products from us are often in a very stressful situation. And whatever we can do as a company to build products and services and tools to make their lives easier, like, that will reflect on, hopefully a much longer term relationship with our company.

How long did it take to stabilize where it was like, okay, because you said it was a couple of years. Really?

Where you.

You almost didn't have enough product because of all the demand. Like, when did you finally feel like, all right, you're still like, it's all chaos?

Yeah. I mean, you know, in every phase of the business, there's always like a different challenge. That's. Look, I think three or four years in, we definitely got to a place where I worried less about existential risk. Like, at the beginning, you're always thinking, we could go out of business tomorrow because something could go wrong. And at some point, you get big enough and you're like, okay, we're like a few hundred people. We have a big infrastructure and a big team. And you still kind of worry about that, but you're like, okay, now I think we're going to be around for a while. What's the next chapter of the company and what does it look like? And then you get all these harebrained ideas for things that you should try. And then the chaos starts again.

I think there's four or five co founders.

Five of us.

Yeah, that's a big founding team. But I'm curious, what were the first hires? When I just think it's such a unique position to be in to, like, launch a product and within a week be like, we've sold way more product than the 30 mattresses we were expecting. What were the first hires?

So at the beginning, okay, let's think. So there were five of us. We split it up. One was working on technology, one on brand supply chain and operations marketing, and then kind of like brand marketing and stuff. Then our first few employees were both in the marketing world. We actually had one who focused on pr who ended up founding this company called Chief, which is, you know, amazing place for women who are professionals to kind of network and. And learn from each other. And then another one who worked, Terry, who worked on paid acquisition marketing. And then the third was actually my roommate, Michael. And Michael was like an investment banker at Piper Jaffray, the firm. And he also really wasn't enjoying that experience. And so I was like, hey, Mike, can you just kind of come help us out doing customer service, like, nights and weekends? And, you know, bless his soul. He was like, okay. So after having worked 14 hours at this investment bank, he would come and write customer service emails for us at nights. And, like, the other thing is, we would send every customer a handwritten note. And at some point, there were so many mattresses that we had to mail that we basically set up a table in the middle of the office, and we said, every single employee has to write 50 handwritten notes before they leave, otherwise we're never going to get these all out the door. And so Michael would, you know, sit there, write these handwritten notes. So Michael ended up leading our customer service team and stayed with us for a long time where we switched from banking. But, you know, it was a lot of like. It's funny because at the beginning, you have to beg people. Because everybody's like, this company, you know, even pre launch in the early days, it's not clear that it's gonna work. And everybody's like, leaving these amazing jobs and so you're like, please take a chance on us and kind of do this crazy thing.

How long did the handwritten notes last?

Oh, years. Wow. Yeah, yeah, we wrote a lot of notes.

Oh my gosh. So, you know, I think something that has been illustrated here and that I know knowing you a bit like that 0 to 1 phase, I think you're really exceptional at and have had a lot of experience. Experience figuring out, like, all right, how do we get this from a total idea concept that I'm having with a buddy to a really functioning company. I know you've now continued to work with a lot of startups, again invested in 200 plus startups. At this point, would love for you to talk about how you work with, like, what do you tell folks? Like, what do you think right now the landscape looks like in terms of the best practices for that 0 to 1 phase?

So 0 to 1 is like 1 of the most fun and the most painful experiences that you can ever go through. I'm sure many of you have started companies, so you know that experience. And generally what I mean by that is like that phase from you have an idea for something, there's a problem that exists in the world that you want to solve, and it could be really small. It could be. Or it could be really big. Like, I want to launch a nuclear fusion company and change things. So it could range that whole experience. But often it's about honing in on an idea, thinking through, could this idea be a business, right? And then going through the iteration cycles of like, what is it? Talking to customers, actually figuring out, like, would people pay for this service? Or are my friends just saying this, that they'd buy it? You know, there's this idea called the mom test, right? Which is like, you know, you actually, you have to get it to a place where it's like, if your mom says yes to everything to you, like, you have to kind of like get past that point, right? That it's a good idea. So I'll give you a story. Like one of our early employees started, actually probably was our second or third employee. Casper was in the customer service team. A remarkable, remarkable human being. And I was like, this guy's going to do something special one day. And right after he had left Casper, probably four or five years in, he said he wanted to start a company and he had moved to Spain for a while and had fallen in love with the culture. He had met a Spanish girl, and he was like, I want to start the Italy of Spain. Okay, interesting. He's like, I want to bring Spanish culture to the United States. Okay, cool. So we'd go on walks and we talk about this thing, and, you know, he's like, you know, like, okay, like, is it a location? Is it, you know, food? Are we going to import all this stuff? I'm like, I don't know. It sounds really hard to open in Italy of Spain. But, like, maybe you should, like, keep working on, like, maybe there's another idea here. And so over time, what he realized is, okay, the thing that he really loved was the olives. And we realized he had a passion for cooking. And he had said, what if we actually bring really high quality Spanish olive oil to the United States? And that kind of fit a lot of interesting things for him, because he was obsessed with figuring out, how do we get people healthier? How do we bring an element of Spanish culture that's generally untapped for people? So we said, okay, that's kind of interesting. Like, there aren't that many brands that are around olive oil. Maybe there's something there. But then he kept refining this idea. And one day, we're sitting in a kitchen, and we're with one of our chef friends, and we realized that chefs actually put olive oil in squeezy bottles. They don't put them in glass bottles, because when you're in the kitchen, you use a squeezy bottle. It's much easier to use. And we said, huh, what if we had olive oil that's in a squeezy bottle? Because then everybody would keep it on the countertop, they'd use it a lot more, and actually we'd feel better about it, because the more you cook your food in olive oil, the healthier you're going to be. And so we actually launched the first. It's called Graza. I don't know if you guys have ever tried it, but it's one of the first olive oils that's in a squeezy bottle. Nice endorsement. And it's actually done remarkably well. But that process of getting from a place of where you have an original idea, or at least a hint of an idea, to eventually where you go to. And now they just launched, like, potato chips and stuff, which are delicious, but it can often take a few different iteration cycles of talking to people, checking the idea, honing in some more Backing up, thinking about it. And those are the parts that often people don't talk about.

Yeah. What's so interesting, what's coming up for me is even the way where I started this, in hindsight, I look at Casper and I was like, oh, great. You had this insight about how poor the customer experience was in terms of mattresses or how bad the distribution model was. And you're like, no, we just wanted to work on sleep. We had this much bigger picture idea. And it's sort of the same thing here. You could look at Graza and be like, oh, the insight was the squeezy bottle. But the insight actually started with just like Spanish culture, these kind of bigger ideas that then get honed into something tangibly and, you know, tangible on a product.

I think you're right. I think, though, that like, that would be giving us a little bit too much credit in a way, because sometimes I think that you both need a big idea. But frankly, it's kind of why sometimes investors talk about the market being so important. And I never really understood it until many iteration cycles later where I was like, oh. I think often starting a business is like putting up a kite. And if there are really powerful wins that you can catch that are already up there, your business can be way easier. Right. And those wins are the market. Those wins are like the idea that, like, people want this thing or like the world is kind of like ready for it. And I think that's why you see some of the fastest growing businesses are often like, it's not that they were geniuses. Often the same idea might be in the water in many different places. And it's why you see, like, whether it's scientific invention or great businesses, like, why are there a few of them that have a similar idea that often start around the same time. It's usually because the world is probably ready for something and you've picked up on that thing. And maybe other people are picking up on the same thing too.

Well, we talked a little bit before. I have a mother who's a big olive oil person and has been calling me for years being like, it's all fake. The olive oil, they're cutting it with canola oil. So I've been kind of aware of olive oil from a totally different. Again, not the reason that this new olive oil category or, you know, why Graza was started, but again, it's sort of wind at your back that there is this. There's people who are concerned about olive oil for a variety of different reasons. And you're solving that problem across all of them. So maybe talk a little bit about what the process was like for this individual in terms of going from, okay, I want to start Spanish Italy to the Olives. Was that conversations with you? Was it him? Is he journaling? Is he just thinking about the problem really hard? Like, how do you go from this really big idea to distilling it down to a product?

I think it's all of the above. I think we had a great relationship. We'd go on walks. And to be fair, all the credit goes to the founders of that company. I was lucky enough to be helpful on the sidelines. But my point was actually that when you have an idea, and then I think it's really important to actually talk about your ideas out loud. So it's something that I've really struggled with over time, because even when I've had ideas, it's been sometimes hard for me to share those with other people because I'm like, it's not fully baked, right? And last night I was talking to somebody at our dinner table who was talking about the amazing thing about being a comedian is that you kind of have to go up there all the time and just like, share unbaked ideas. And I actually think that's great. Like, you hear the stories about Steve Jobs, who's always out there pitching ideas, and so I think it connects to what you said, because that helps you kind of refine what's going on, right? It doesn't mean that people have to like your idea, but you'll start, you know, like, honing in. Especially if you're in a consumer business where you're going to sell to other people that are like, you, like, oh, interesting. Like, maybe that's a real problem. Maybe that's not a real problem. Maybe actually they have this different problem that I should work on. So there's a lot of thinking and talking, and then at some point, you just kind of have to decide to do it. And there's this, like, threshold, right? A lot of people ask yourself, like, okay, but how do I know that now is the time? Like, how do I get the confidence that, like, I should do it? Like, you know, and do I need investors to go and do this? Right? Or do I need other people to go and do this? And the answer is, sometimes you need investors. And, like, it's great to pitch people. And I think a lot of times these days you don't. Right? You could start. A lot of the greatest companies were not started by venture capital. From day one, they're started because somebody had an idea and they just kind of got started and started proving it out and then later figured out the financing and stuff. And so I think the most important thing is just to kind of get out there and get started.

Did Graza pay for some Facebook ads and see who clicked on it?

I don't think we did. I think we just had a strong hunch. Now I think that perhaps in both Graza and Casper where there was a packaging innovation that was a bit disruptive, it was very helpful and we didn't realize it until later that sometimes form factor innovations in CPG can be very powerful because you remember like gogurt when you'd like drink this thing, this yogurt out of like what a weird concept. But it crushed it, right?

Because it always would cut, it would.

Kind of cut my mouth. Somebody should have form factored, innovated on gogurt on the gogurt form factor.

There's an idea out there. Somebody figure this out. And so yeah, I think that sometimes you just have to have a gut instinct and then start getting out there. Try it.

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So let's talk a little bit about what you're up to now and then we'll open it up to audience questions. So I know, I almost hate to say it, but AI right. Sort of where it feels like everybody who's an entrepreneur right now has to be thinking. And I know you're playing in that space as well. So talk to us about what you're working on and what you're thinking about.

Yeah, well, I'll tell you a little bit of the journey. So I became fascinated with AI last year when GPT4 came out and frankly I had never really thought about it before, but the thing that had occurred to me was that there's so many people involved in running a business and that's amazing. It was like my favorite part of working with a huge team. But actually like the coordinating people starts to get very hard and complicated over time. Like when we went from and like when I was like 25 or 26 helping run a 500 person company, it's like, we had no idea what the heck we were doing. Right? And like, also we're working with mostly 23 year olds who also have no idea what they're doing. So it's like the blind leading the blind oftentimes. But so the cool thing about AI is that I think that it has this ability to give people superpowers. Like when I first used ChatGPT, and I'm like, whoa, like, this is incredible at figuring out how to like unlock this thing in my brain of having like a sparring partner and stuff. Okay, so how it fits in. I want to talk about what I'm doing, but one of the things that I'm very interested in, aside from that, is that when it comes to small businesses and entrepreneurship, I think one of the best use cases for AI is going to be how do we help smaller teams scale larger businesses? And I think what's going to happen is like, for a while I was living in Austin and I wanted to start a company related to helping small businesses. So I went and talked to like dozens of small businesses and I was like, okay, like, how do you do your marketing? Okay, what marketing? Like, if I have a pizza shop, they're not running Facebook ads most of the time. Why? Because actually it's really hard to like create the copy, create a Facebook ad, check on if it's performing well. And I was like, so you're telling me there's no way for you to just like type a message that says, like, I'm having a slow Friday. Can you spend 20 bucks or 50 bucks to drive more traffic here today? And they're like, no, there's no way to do that. I'm like, that's gonna happen though, right? We're getting to a place where actually, like, if you run a restaurant and you're sitting there actually, you know, looking at the menu and then thinking about, okay, how much food do I order? And then how much waste have I had over the last week? And then, you know, what's the weather look like for next week relative to last week and how much food should I order? And you're doing all this math in your head, like, we're gonna have an AI system that can do all that stuff for you so you can make your business more efficient. Right? And those are often things that, like, I don't wanna do anyways. Like, they're not necessarily things that people exactly wanna do. Now I also think the flip side is there is real reason to be worried about the changing world order when it comes to, like, what happens to all of our jobs, Right.

When we say, like, oh, smaller teams are gonna run larger businesses, it's like, what does that mean practically? That means other people aren't working there anymore.

Yeah, exactly. And so it's unclear how the narrative gets written. To me, the positive narrative is, what if we had more small businesses? I love small businesses. To me, when I go to a restaurant and the owner is there, the food is always better. 100% of the time, they're putting their love into that thing versus going to a chain. There's nothing wrong with chains, but it is a different experience. Maybe it's because I grew up working in my grandfather's store on the Rutgers campus in New Brunswick, and he was there every single day, and all the people in the community knew him. And if, like, somebody didn't have, like, if they didn't bring their wallet, he'd be like, yeah, don't worry about it. Come back tomorrow. Right. 711 is not letting you do that. They're like, you know, and so maybe there's a world in which a positive version of this is that, like, people don't have to work for other people. Maybe people will start more small businesses and do other things. And so, you know, I think that the story remains yet to be seen what happens. But I think getting. Using these tools and figuring out how to scale what you're doing, there's going to be something powerful there if you can lean into it. All right, so the second question is what I'm working on. So I realized that I had a big interest area from sleep into mental health. And we have obviously a mental health crisis here in the United States and around the world. There has been an enormous uptick in the mental health challenges for people. And so I started thinking about what if we could use AI to actually help people with their mental health? And so we're still in the early days, but we're doing research around what are tools that we could use around either helping therapists or helping build tools that can help people make sense of the world over the next 10 and 20 years as things are changing.

All right, folks, well, let's start maybe teeing up some questions from the audience.

First question is, what level of consultancy do you need to do with a patent attorney if you're coming up with something like a mattress that is in a huge field competing with other mattresses? So we did some. Luckily, we were in a category in which the innovation that we wanted to have at the very beginning, which the core thing we came up with was that originally people had sold memory foam mattresses. And the problem with a memory foam only mattress is that it often feels like you're getting stuck inside of it. You remember those old Tempur Pedic commercials where, like, somebody's walking and there's a wine glass that doesn't move and you're like, is that really what you want? That would not be fun to have. Sleep, sex, other things, you know. So we had figured out that you could use latex and memory foam together. And the reason it hadn't been done is because the factories were not designed that way. Memory foam factories made memory foam. Latex factories made latex. Spring factories made springs. And they didn't want to, you know, cross combine. So people had not done this strategy before. And we did a little bit of consultation. I will say, though, that, like, there's something brilliant about the naivete of, like, not really knowing that that's something that you're. That you need to do. Because we kind of just did it and then eventually realized later, okay, thank God this whole thing is not super patented. So I think it's worth, you know, a lightweight check. That said, I will say, you know, the problem often with ip, and maybe we'll talk about the other side of it too, which is, like, how important is it to own a patent on what you're doing? Right? And if you own a patent on what you're doing, often it's challenging because, like, to defend that patent costs money. Like, you've got to spend money to sue the other person and hope that you have more money than they do. And so often this ends up being a big dog, small dog fight between organizations, and then you settle somewhere in the middle. And so I would say that IP can certainly be a very important part of what you do. But, yeah, we didn't spend that much time thinking about it until later.

I know you have a follow up, and I want to get to your follow up, but on this, because I have thought about. I know you sent one of your early mattress prototypes to your first big investor.

Oh, yeah.

Where did the money come from to build them? Like, how did. How did you at 23, be like, oh, yeah, I'm gonna make a new mattress? Like, how did you guys.

Yeah, okay. So at the beginning we had no money. And, you know, we had credit cards, but they had relatively small limits. And. And so we had found a factory in Atlanta and we flew there. At the beginning it was just like, can we convince anybody to work with us? And almost all the factories said, no, this is a dumb idea. It's never going to work. And so we finally found one factory and then we went to that one factory, bless them. They actually ended up making quite a lot of the samples for us on their own dime because they kind of believed in our story and what we were doing. And they were like, yeah, yeah, it's okay. You could pay us back later. And I'm like, oh, man, I hope there is a later. But, you know, and so they were great. And the other things we didn't realize actually were that when you manufacture in the United States often versus building things in China in the mattress category, it's kind of amazing because they will give you credit terms. And so if we sold a product, they would actually let us pay them 30 days later after the day we sold that product, which means we floated 29 days of cash, which meant that as we grew, we actually had a negative cash conversion cycle. And our, you know, now did we plan that? No, we just got lucky that we were like, we realized that later because investors, I remember investors in our later rounds were like, wow, you have a negative cash conversion cycle. How brilliant of you to plan that. And we're like, yes, we are very smart.

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Okay, go ahead. Sorry. Your second question.

Where did you get the name? Oh, the name Casper. Okay, so originally our business was called Dukes. And. Okay, you want to know why a duke?

Yes.

Because why are mattresses named after queens and kings? And we were going to be the Rogue Dukes.

Oh, that's.

See, but it doesn't make sense until you tell that story. And so every time we tell somebody that story, they're like, ha. It took a while to get it. And so we originally were named that. And then we had hired this branding agency that was terrific called Red Antler, based in Brooklyn and spent a bunch of time with them. And we thought of like 200 different names and we just couldn't align on one. So one day they locked us in a room and they said, we're not leaving until we pick a name because we're like two months from launching. Like, we gotta, you know, we got boxes to print, we got labels to print. Like, we gotta get going on this thing. And one of our roommates was actually named Casper, but with a K. He was a German guy and he actually was very tall and he had this like tiny twin sized bed and he didn't fit on it. And so I think it was Gabe, my co founder, was like, what if we named it Casper? And then we looked at it, we're like, but people are gonna misspell it with a K. So we just changed it to a C and we called it Casper.

I always figured it like had like a, like the ghost. I don't know, Ghost. And it's like kind of puffy and fluffy and you sleep on it.

I don't know.

Right. That sort of feels.

I think there's something, you know, there's an era in which a lot of people built brands that were trying to be a little bit anthropomorphized. And so there was this idea that you can create a brand that was like a little bit kind of funny and weird and you almost felt like you knew the person through it. And so, yes, it was partly that and partly just, you know, they always say, like, it should be something that's easy to say in a bar in a loud environment so that people can kind of pick up on it.

Yeah, it's a good name.

It worked.

Other questions for Neil. Okay, we've got somebody right there in the center. Yes.

Hi, I'm Danny. I also do a lot of brand Work and marketing, and I've worked in a ton of startups, so I loved your analogy of the kite and sort of like catching the wind. And that's amazing. When you catch the wind and sometimes you catch the wind and you go. And you go. And then the wind starts to die. And so currently working at a startup where I'm feeling like the wind's dying a little bit on us. And so I'm curious to hear. You've worked with a lot of startup founders and things. I'm curious to hear the story of when the wind starts to die and what are the ways to start to turn it back so that you either catch the wind or know what to do next.

Yeah, I will acknowledge that is probably one of the most challenging situations to be in. And you're not alone. I mean, I would say I get a phone call every week from a company that's probably going out of business because there in a. And I hope that doesn't happen to you guys, but you know, into a challenging situation. So I don't have a good answer. But I'll tell you about what happened a little bit. Casper. So, you know, we were on a tear path for a while, growing very, very quickly. And then what happened in our category was that it started getting very competitive. I'm sure you imagine this era where like 2017 or 18 people start getting, like, hundreds of ads for different mattress brands. You know, like Jasper, Lisa, this, that. Whatever actually named Jasper. No, I made that.

I was like, my God.

But there was one called Ghostbed. And then they sued us for a trademark violation. I'm like, really? But. It started to get very competitive. And then we had to think about actually totally redoing our strategy, because originally we were acquiring all of our customers online. And we thought we could grow for a long time just going online. And we realized was actually, it's getting very competitive online. And even though we were very confident that we had the best products, the best service, the best team, you know, we won Consumer Reports all the time. It was easy for other people to siphon off our customers. So we realized, okay, we have to actually go find our own customers in new ways. And so that's when we started in testing out stores and working with wholesale partners, which was kind of antithetical to the original business because we were like, no, we're online only. And then we had to eat our egos and go, okay, maybe. I don't know, maybe there's some people who want to buy these things offline. And so we Ended up building stores and now we have 80 of them or 70 or 80 of them around the country. But that was a hard pill to swallow at the beginning because it was very different than the original strategy that we imagine. And we had to be a little bit open minded to it and do it in our own way. So what I'd say is that sometimes it's about changing your distribution strategy. Can you get in front of people in a very different way? Sometimes it's about being real about the market. Sometimes I do wonder, should all businesses exist forever? I don't know. I think that we're on this path where there's an expectation that things last forever, but I think that history is generally not in the favor of that. There aren't like how many hundred year old companies do we still buy products from today? And so I think a lot of it is like to me the point is we have to keep reinventing ourselves and not, you know, like, I don't think that it is a like God given right to exist as a business. Like customers are giving us their hard earned cash and so like we have to figure out how to keep delivering that value for them. And in a world right now where like everybody's hurting a little bit, right, Inflation is getting higher, things are more expensive, people feel like they have less money, mortgages are really high and there's more pressure on people. And so like, I think that's partly what we're feeling as businesses is that like the same value prop is probably not holding as true anymore because everything else is harder. And so either their expectations have gone up or there's more pressure on people. So I think it's just like, you know, it's like we have to find more and more creative strategies, right? Find customers in different places, change the size of your team, reinvent. And sometimes it's hard because it feels like spaghetti. Like I've been in that place where it's like we're throwing 50 things at a wall and hoping that one of them stick. And that is extremely uncomfortable and it feels like super chaotic. And I think that there's some validity to not trying that. But yeah, it's hard.

When do you know when it's time to say, okay, maybe it's time to shutter this business?

Well, I think as a founder, what's really hard is that it feels so personal sometimes. You know, you may have worked on something for a long time and it may be connected to your Persona and your identity and your friends work there and like, you know, it's connected to all this other stuff. And I had closed a company before, and I remember the night before I couldn't sleep because I was like, oh, I'm gonna tell my investors tomorrow that we're shutting down. And I lost most of their money and it sucked. And my biggest lesson from there was actually when I did that, almost everybody and I was very lucky to have great angel investors, was like, cool, yeah, no worries. It's all fine. Let us know when you start another company. And I remember I had been so stressed about it for weeks and weeks, thinking, this is the end of my life. I will never do anything again. And hopefully if you investors, you realize, like, this is a long term thing, you will try many other things in your life and, and hopefully, like, you don't need to kill yourself for other people. Like, if you really feel like you're not at the, you know, like you're at your wit's end, like, you know, shut it down and try something else.

Thank you to Neil.

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