Number
Casper went public and now trades below the cash it raised, ~0.5x revenue
Sam notes mattress brand Casper raised about $250M before its IPO but now carries a market cap of just ~$200M, roughly 0.5x revenue, less than it raised, a warning sign for DTC hardware valuations.
$200M
Casper public market cap · USD
“So Casper has a market cap right now of $200 million. We had the founder of Casper speak at HustleCon. Awesome guy. Great story. Really great business. When it was just getting started. It made $1 million, and I think its first week they raised, prior to going public, around $250 million. I think as of this second, they have a market cap— they went public— of $200 million. So they are worth less than, um, the amount of money that they raised.”
Number
Casper: $250M market cap on $500M in sales
Sam pitches buying Casper, noting the mattress company traded at roughly a $250 million market cap despite around $500 million in annual sales. His fix: stop running it from New York and move operations to Utah.
$250M
Market capitalization · USD
“$250 million market cap with like $500 million in sales a year.”
Idea
Buy Casper, fire everyone, move it to Utah
Sam argues Casper isn't a trash company, it just shouldn't be headquartered in New York. His turnaround plan is to relocate the whole operation and stop staffing mattress customer service with Brooklyn hipsters.
“it's not a trash company, it just shouldn't be in New York. I would buy it. He should buy it and fire every single person and move them to Utah. Tell me why a mattress company has customer service people who are hipster hipsters out of Brooklyn or in Manhattan.”
Steal thisWhen buying a cash-flow brand, attack bloated coastal G&A by relocating operations to a low-cost geography.
Prediction
Partial
DTC's only exit is a PE buyout priced on profit, not revenue
Sam predicts direct-to-consumer brands, after Harry's was blocked and Casper went public at half its private valuation, will have to sell to private equity firms that ruthlessly prioritize profit and value them at 5-10x profit instead of a revenue multiple.
“My prediction is, and I think many people have this prediction, is that the DTC companies, what they're going to have to do is go the route of getting sold to PE companies. Right. And which means it's going to be ruthlessly prioritized of profits. Profits. So like 5, 10 times profit. I think it's a good thing.”