Calm - The $2 Billion Growth Story
How two burnt out entrepreneurs built the biggest mindfulness app in the world.
Why should you care about reading this?
Here is what you can expect:
Before we jump into the moment Calm was born, I want to give a quick rundown of the incredible backstories of Calm’s two founders, Michael Acton Smith and Alex Tew.
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Let’s start with Michael.
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“In 1998, while still in his early twenties, Michael Acton Smith co-founded the online gadget and gift retailer Firebox.com with his university friend Tom Boardman. Starting in a rent-free attic and with a ￡1,000 loan from Smith’s mother, their big break came with the “Shot Glass Chess Set.” Within five years, Firebox was recognized as the 13th fastest-growing privately owned business in the UK by The Sunday Times 'Fast Track 100'.
Wayback Machine - Screenshot of the website in 2003
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Building on his success with Firebox, Smith secured $10 million in funding and launched Mind Candy in 2004. The company introduced Perplex City, an alternate reality game featuring a global treasure hunt with a ￡100,000 prize hidden somewhere in the world. The game played out across various media, including websites, text messages, magazines, live events, skywriting, and helicopters. Although it garnered positive press and was seen as the future of gaming, even earning a BAFTA nomination in 2006, it only attracted a niche audience. After three years and $9 million spent, Perplex City was put on hold.
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With just $1 million left, Smith took a final gamble. In 2007, inspired by the rise of Facebook and popular kids' brands like Tamagotchi, Mind Candy launched the online world Moshi Monsters.” Source here
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Moshi Monsters generated over $250 million in revenue, employed 200+ people, attracted tens of millions of users, and became the most licensed product in the UK. Michael had offers to sell the business for hundreds of millions of pounds but didn’t take any of them. Then in 2012, business suddenly slowed down due to a platform shift. Kids moved from playing games on desktops to mobile/tablet games, and Moshi didn’t adapt quickly enough. It was much harder to create a monthly subscription service at the time. Unfortunately, this business had to be shut down. Source here
Source here
Before we get to Calm, let’s have a look at Alex Tew, Calm’s other co-founder…
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He is the creator of the “Million Dollar Homepage.”
“Late one night in August 2005, he lay down in bed with a notepad and brainstormed cheap things that he could sell a million of. He jotted down dozens of ideas, including a terrible product he called the “Gum Slinger” (a small pouch for used chewing gum).
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Then came the once-in-a-lifetime idea: he’d start a webpage with a million pixels that could be purchased for $1 apiece.
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Two days and $50 in domain fees later, the Million Dollar Homepage was born.
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The concept was extraordinarily simple: for a minimum of $100, an advertiser could buy a 100-pixel block (10 x 10 grid) and display an image or logo of their choosing, with a hyperlink. The only guideline was that it couldn’t be porn.” Source here
Post-Success Void:
“Newly minted with money (about $700k after taxes) and internet fame, Tew dropped out of college after one quarter and moved to London.
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His instant success was a confidence boost, but it came with unexpected consequences.
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“Success can actually be bad, and can teach you the wrong things,” he says. “I was thinking about ideas that would get attention instead of provide value.”
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“Between 2006 and 2010, he launched a series of ventures — Pixelotto, OneMillionPeople, and PopJam — that attempted to leech off of his Million Dollar Homepage fame. Unable to replicate the hit, he moved to San Francisco.” Source here
Here is where the stories collide and Calm is born:
Alex Tew had been pestering his friend Michael Acton Smith to try meditation for a while but after his rollercoaster journey with Mind Candy Michael was finally open to it.
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Here is an extract from an interview about this time:
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“I’d take painkillers every morning just because I woke up with such a headache, and my body ached. I felt like I was hit by a truck every morning, so these painkillers would kind of help me get started in the day. It was a very tricky time.” Source here
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Feeling overwhelmed by business challenges, Michael took a solo trip to the Austrian Alps.
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Amidst morning tennis, reading, and jotting notes, he ventured into meditation.
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The practice was transformative: "The fog started to clear, and I realized mindfulness could rewire the brain."
Inspired, he returned and shared his vision with his friend Alex. "Right dude, you finally get it. Let's go," Alex said. They dreamed of making mindfulness accessible to everyone and stumbled upon the domain Calm.com.
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Initially priced at a million pounds, they later secured it for less, betting their savings on this venture. Thus, Calm was born.
Hitting Early Viral Success with DoNothingFor2Minutes.com
So many businesses are founded from a standing start. The founder falls in love with an idea without ever validating the need or desire for a product in the market. This is a part of the Calm story that really sets them apart from the rest.
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Before Calm had even been officially founded, Alex Tew hit viral success after feeling perpetually overwhelmed by technology:
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“I had been thinking about how we spend every waking minute of the day with access to an unlimited supply of information, to the point of information overload. I also read somewhere that there is evidence that our brains are being re-wired by the internet because we get a little dopamine kick every time we check our email or Twitter or Facebook and there's a new update. So we're all developing a bit of ADD, which is probably not great in terms of being productive.” Source [here]
Alex’s Solution?
A simple landing page with:
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The Objective?
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Do nothing for two minutes.
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Simple, right?
The site generated hundreds of thousands of visits, amassing over 100,000 Facebook likes and a ton of high-intent email addresses.
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You can never fully predict what will go viral, especially back in 2011.
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However, I do think this had some fundamental components of content that goes viral:
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Why Is This Even Important?
What Are the Market Conditions?
I noticed that revenue for Calm and Headspace was down in 2023, so I wanted to dig further into this.
Revenue - (000’s of millions $)
Source: Business of Apps
The decline in revenue for the meditation apps Calm and Headspace in 2023 can be attributed to several factors:
What’s the future opportunity for Calm?
Growth Breakthroughs:
Just Increase Your Prices. Simple.
In the beginning, Calm was charging $10 for a subscription, but they needed something big to boost their income as they were struggling to raise funding.
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So they thought, “What would happen if we just increased our prices?”
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They quadrupled their price from $10 to $40 a year and saw almost no drop-off in new sign-ups.
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Valuable lesson:
“Probably the single number one thing we try to get our companies to do is to raise prices. Is your product any good if people won't pay more for it?" - Marc Andreessen
Source here
Calm’s pricing model today here
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Why This Pricing Model is Smart
Advantages for Acquisition:
Making Calm a Daily Habit:
Here's a great insight into how Calm used a smart psychological principle to boost user engagement.
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When Calm teamed up with Tamara Levitt, their brilliant meditation teacher, to create the Daily Calm, it was a game-changer.
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Meditating can be tough—sitting down alone, trying to focus. But Tamara designed a unique 10-minute session every day, complete with new lessons, quotes, and motivations.
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???Psychological Principle:
According to the book "Hooked," this strategy leverages the concept of variable rewards, where the unique content each day provides unpredictable and exciting rewards, keeping users engaged and looking forward to the next session. This was a crucial turning point for Calm, transforming user engagement and making meditation accessible and enjoyable.
Discovering Calm Was Being Used for Sleep:
This is a great example of why being close to the customer and your data is so crucial for a business in the early stages.
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Calm noticed a massive spike in app usage globally every day at 11 pm.
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They realized people were using Tamara’s meditations to help them fall asleep.
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They took a step back and thought about how they could capitalize on this.
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They created “Sleep Stories.”
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“Instead of a traditional story arc, they designed a story slope that starts interesting, engages the mind, and then gradually becomes more soporific until the listener falls asleep before the ending.” Source
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It became a massive hit. So much of a hit, it is now a core component of the app’s identity.
Reflection Questions:
Sleeping with Matthew McConaughey
Easy now. Not like that!
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Calm started knocking on the doors of Hollywood looking for a celebrity to read one of their sleep stories but came up short.
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Their breakthrough moment came through one of their investors, Ashton Kutcher, who knew Matthew McConaughey.
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They’d heard on the grapevine that Matthew used Calm in one of his children’s charities and was a big fan of Calm.
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So they managed to get the introduction, and he was immediately up for it.
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Once that domino fell, other celebrities were knocking on the door, and it made it much easier.
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“Calm has built a franchise around its Sleep Story series, with several tales on the app narrated by celebrities including: Jennifer Garner, Shawn Mendes, Cynthia Erivo, Camila Cabello, Nick Offerman, Harry Styles, Michael Bublé, Matthew McConaughey, LeBron James, Regé-Jean Page, Laura Dern, Cillian Murphy, Idris Elba, Priyanka Chopra Jonas, LeVar Burton, Lucy Liu, Mandy Moore, and Kate Winslet.” Source here
Hiring 10x Talent
Hire great people and get out of their way.
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It’s been repeated so many times that it has almost become a bumper sticker.
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领英推荐
The all-time great founders always speak of how important finding great talent is.
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Let’s take Steve Jobs, for example.
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Walter Isaacson, who was asked by Steve Jobs to write his biography, stayed at Jobs' house for over a year following his life.
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Isaacson recalled that Jobs didn't count any of his products or devices as his greatest accomplishment.
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"It was the team that got put in place," including Cook, design guru Jony Ive, and marketing chief Philip Schiller.
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Here are some great quotes of a similar sentiment:
“First,” advises Jeff Bezos, his laugh echoing through the Amazon rainforest, “hire the right person. Give them a good vision and priorities. That person can easily generate 10X the average employee.”
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“It’s like compound interest,” muses Warren Buffett, sipping his Cherry Coke. “Invest in the right people, and their impact compounds geometrically.”
Source here
Who did Michael say was a key 10x hire for Calm?
Calm, Zynga, Virgin, Yahoo
“A lady joined us called Dunn who's just brilliant at user acquisition and she understood Facebook marketing inside out, and that was the next sort of piece of the puzzle that really started to take the business to the next level.” Source here
Deeper Look at Calm on Meta:
Calm has over 480 ads active globally and seems to have a very regular upload schedule, with new ads appearing weekly or even more frequently.
Mindful Paid Acquisition. Don’t worry, this isn’t a new buzzword.
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Before taking a deeper look at Calm’s Meta strategy, I wondered how they would manage to incorporate their brand values into paid acquisition without straying from their mission of improving the mental health of their customers.
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I was pleasantly surprised by the strategy they’ve taken with their paid creative.
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Interactive Ad Type:
In this ad, they actually get you to interact with the ad, stop, take a deep breath, and listen to the calming sounds being played by the ad.
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In a similar vein to the business Alex started prior to Calm, “Do Nothing for Two Minutes,” this ad runs counter to the dopamine-hijacking culture we are in and presents a precious space in someone's doom-scrolling to take a moment for themselves to practice being mindful.
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My hypothesis behind this ad is that it preselects people who are more likely to convert by showing them the value of taking a break up front.
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Considering that Calm offers a 7-day free trial and has many of these ads in their library, I think this is a successful ad for them.
The hook for this ad was, “If your brain is feeling scattered, rest here for a moment.”
Educational Ad:
Calm has a whole collection of these ads, which are based on various mental health issues that people may be facing and provide a set of 4-5 tips to help improve the issue or, on the other hand, to help people understand more about the issue they are facing.
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Some of the headlines include:
Celebrity Talent:
Variant Testing:
It’s clear from their Meta ads library that they understand creative testing and the type of content that is native to users.
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A weird phenomenon has occurred on social media where users will post a video that includes a split screen. One half of the video has “sludge content,” which is normally a very satisfying video where something is completed perfectly, such as a video game or someone slicing a cake into perfect slices.
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Example here:
Calm is doing lots of variant testing inside their account where they have the same opening statement:
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“If your mind is feeling scattered, rest here for a moment…”
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Then the opening video will be a set of videos that are very satisfying and calming.
Localising Ads Across the World:
“Calm is being used in more than 190 countries around the globe, and our content and engagement resources have been localized into seven languages: English, German, Spanish, French, Korean, Portuguese, Japanese.”
YouTube - 24/7 Marketing Funnel
Calm have a collection of videos that have 10’s of millions of views and are driving significant traffic to their site each and everyday that is running an automatic 24/7 marketing campaign on their behalf.
Let’s take a deeper look.
Nearly 50% of their social traffic is coming from You Tube.
Source: Similar Web
They have 980,000 subscribers on their You Tube channel and nearly 700 videos!
If you take a look at their most popular organic videos the largest one has over 52 million views.
They are still posting this type of content today but since You Tube is one of the biggest search engines in the world these videos continue to pick up traction over time!
Dominating Organic Positioning:
When searching “mindfulness” or “mindfulness meditation,” Calm takes the first spot after the sponsored ads.
Try Before You Buy:
Similar to their Meta ads that allow users to experience the benefits of the product before trying.
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Whether it’s calming sounds, a meditation, or a hack for anxiety, Calm has a video for you.
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Each video has a very simple description with a clear CTA:
This takes you to a great landing page where it removes all friction in the customer journey by allowing users to take advantage of their 7-day free trial.
How Can I Take Advantage of This for My Brand?
Step 1: Understand the Opportunities
Understand the intersection between the important problems your product solves and the important problems potential customers are searching for.
Use tools such as Ahrefs, Exploding Topics, or Google Keyword Planner to understand what searches are being made in the market that are generating a lot of traffic.
Try to find keyword searches that have high traffic but limited high-quality content meeting the needs of the user.
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Step 2: Create the Content
Create quality content for YouTube (as well as other social platforms) that provides value to your customers and will rank organically.
This is where prioritisation will be fundamental. Undertaking this strategy will likely come at the cost of another. Even if it’s done in a scrappy way.
The goal of step 1 should be to build a business case to give you the confidence to run the experiment.
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Step 3: Create a Landing Page and Drive Action
For Calm, they have an amazing 7-day free trial.
Not every business can offer this.
This might take some experimentation to find out what is best at this stage in your funnel.
Some options to test:
Treating Content Like a Profit Centre, Not a Cost Centre
Calm’s blog is an organic traffic powerhouse.
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Let’s take this top keyword and Calm article about “Ikigai,” a Japanese model for living a happy and fulfilled life.
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This search term gets over 94,000 searches a month.
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Generating an estimated 36,000 people a month to Calm’s blog article.
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Once on the blog (which is great, by the way), Calm includes several CTAs that allow users to try the app for free.
This strategy has been repeated for hundreds if not thousands of high-traffic searches across various related topics to their app.
Love & Relationships:
Healthy Habits:
How to Calm an Anxiety Attack:
Buying Expensive TV Slots and Doing Nothing:
Calm Saved the Election (Sort of)
When election chaos hit its peak, guess who swooped in to save our sanity? Calm app!
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Picture this: CNN’s nail-biting updates interrupted by serene rain falling on leaves. Genius, right?
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Calm's strategy? Simple yet brilliant. They targeted high-stress moments with ads that offered immediate relaxation.
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This wasn’t just an ad—it was a lifeline.
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Social media exploded with gratitude. People thanked Calm for helping them breathe easier amid the election storm.
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This campaign wasn’t just a win for Calm; it was a masterclass in using timely, empathetic marketing to connect with stressed-out audiences (InsideHook).
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In an emailed statement to Vogue, a Calm spokesperson said the goal was to remind viewers to take a breath.
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“We understand the uncertainty of this election cycle can be a source of anxiety for many of us, especially as it coincides with an ongoing pandemic. Our goal during CNN’s Key Race Alerts was to provide viewers a moment of Calm, and a reminder to take a deep breath during a stressful night,” the spokesperson said.
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“As the rest of the week is likely to hold ambiguity, we refreshed our resource hub with free mindfulness tools to help us all navigate this stressful time. We encourage anyone who might need support to check out the Sleep Stories, meditations, music, and other mindfulness content available on the hub.”
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this is finally out!