It seems that irrational exuberance is no longer popular. Venture capitalists and investors have suddenly decided that actually disruptive brands do not get a free pass from the need to make money. Faced with demands for more accountability many disruptors will have to figure out what might be their real strengths.
Times are tough for disruptive brands. As Tesla struggles to reach its 2019 delivery targets its share price has slumped by nearly a third. Netflix faces a raft of new competitors and debt is mounting as it rushes to rebuild its content inventory. The share price of Uber, Lyft, Spotify, Dropbox and Snap are all down significantly from their initial opening. WeWork abandoned its public listing and cut staff and is halting expansion plans in China in an attempt to rein in spending. It seems that not every big start-up is destined to follow in the footsteps of Amazon.
Venture capital funded disruptors may yet need to figure out what really does make them different from their established competition. While Casper (now valued at over $1 billion) and other mattress-in-a-box lookalikes may have forced the far bigger Mattress Firm to declare bankruptcy, other long-established brands are going strong and fighting back. Tempur Sealy’s mattress-in-a-box called Cocoon comes with a 100-day free trial just like Casper’s. But the big difference between the between Casper and Tempur Sealy is that the latter has over five times the revenue and is making a profit.
Faced with the need to compete on a level playing field – after all, technology is just the enabler – Casper is opening physical stores and seeking to diversify its product line with the aim of becoming “the Nike of sleep” as detailed in this New York Times article. But that is a whole different challenge from being the first company to figure out how to ship a mattress in a box. While there is no doubt that everyone needs a good night’s sleep I suspect that the stretch to become a wellness company is not going to do much to improve Casper’s bottom line.
Of what I am sure, is that if Casper is going to expand and make a profit it is going to have to figure out for what it really stands, walk the talk and then communicate that as widely as possible. To be successful, the pivot to wellness needs to be authentic, not just a business ploy. Today, when trust in all types of organisations seems to be in freefall, people’s bullshit detectors are turned up high. They may not actively desire a brand to make a difference in the world, but they certainly want it to be committed to making a difference in their own lives.
Maybe what Casper needs to do is to think beyond selling more stuff and transition to selling sleep services. The company is already reported to be considering sleep coaching, but what about taking a leaf out of South Korea’s Coway and offering mattress rental and cleaning services too? But what do you think?