‘They don’t even plan to go public’ — NYU professor Scott Galloway says Casper filed for an IPO but really wants a sale

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Hubert Burda Media

  • Casper, the online mattress seller that filed for an IPO last week, would prefer to find a buyer than go public, Scott Galloway told Kara Swisher on the pair’s Pivot podcast this week.
  • “They don’t even plan to go public … they’re basically saying a Target or someone, ‘Come take us out … we’re for sale,'” the New York University professor told the Recode cofounder.
  • Casper’s IPO filing revealed modest revenue growth of 20% and an operating loss of $65 million in the nine months to September 30, and the startup faces intense competition from rivals such as Purple and Nectar.
  • “This company should absolutely not be a public company,” Galloway told Swisher.
  • View Business Insider’s homepage for more stories.

Casper, the online mattress seller that filed for an initial public offering last week, would prefer to find a buyer than go public, Scott Galloway told Kara Swisher on the pair’s Pivot podcast this week.

“These guys have said, ‘We’re in a corner, we’re up against it,'” the New York University professor suggested to the Recode cofounder. “They don’t even plan to go public … they’re basically saying a Target or someone, ‘Come take us out … we’re for sale.'”

Casper’s IPO filing revealed a modest 20% rise in revenues and an operating loss of about $65 million in the nine months to September 30.

“This company should absolutely not be a public company,” Galloway told Swisher. “The fact that they can even think they can get public, is sorta strange.”

Casper boasts a strong management team and has built a strong brand, targeted an industry ripe for disruption, and tapped into growing consumer interest in getting better sleep, Galloway said.

However, its losses are hard to justify given it’s not growing explosively and isn’t a technology company benefiting from major scale or network effects, he added.

Finding a buyer for the business is a better option than pursuing an IPO, Galloway said. When Casper’s bosses asked him for guidance two years ago, he said that he told them, “I have three pieces of advice: sell, sell, and sell.”

His advice remains the same today: “Get out, sell to an old company trying to find Botox to look younger.”

Casper’s biggest challenges are fierce competition from other online mattress retailers such as Purple and Nectar, and the lack of barriers to others entering the market, Galloway said. Those factors will either derail its listing plans, or slash its stock price by 30% to 50% during its first year on the market, he argued.

If Casper fails to go public, months after WeWork’s IPO went up in flames, it could dampen public investors’ interest in similar businesses, Galloway said. There’s a risk that “Casper does what We does and kinda s—s in the pond for direct-to-consumer IPOs,” he continued.

Galloway proposed a better option for venture capitalists than an IPO: Combine Casper with other private e-commerce startups.

“The gangster move here … would be to create a new-age Williams-Sonoma and to roll up Away, Warby Parker, and Casper,” he told Swisher. “Consolidate some of the back end, do a better job of targeting, have more clout.”

Casper didn’t immediately respond to a request for comment from Business Insider.

The idea of a Casper buyout isn’t new. Target considered buying it for around $1 billion in 2017 but ended up taking a minority stake, Recode reported.

Moreover, the New York Post reported this week that Casper discussed a sale with traditional mattress retailers Tempur Sealy and Serta Simmons last year, although Casper and Tempur Sealy both issued denials.