Mental wellness unicorn Calm has more than two million subscribers to its mindfulness and meditation app, raising over $140 million in funding to bring “mental fitness” practices into the daily lives of mainstream consumers. Anchored in a range of audio courses, the company has expanded to video and even book publishing.
Co-founders and co-CEOs Michael Acton Smith and Alex Tew previously founded gaming startup Mind Candy and news aggregator Pop Jam. For Calm, the duo drew from their experience marketing digital products to figure out a business model, content strategy and long list of celebrity collaborations.
In a recent conversation with Acton Smith, I dug into the company’s strategy and the case study it can provide to other entrepreneurs. Here is the transcript of our discussion, edited for length and clarity.
TechCrunch: How do you view this market of meditation and wellness content? When the internet is filled with free content related to well-being and you have competitors like Headspace, how do you differentiate Calm?
Michael Acton Smith: There’s a mistaken view that Calm is a meditation app. We did start as a meditation app, but we think of what we offer more as mental fitness: How can we help people better understand their own minds? The brain is incredibly complex and doesn’t come with an instruction manual.
Meditation was a fantastic starting place, but then we created Sleep Stories, which are our take on a bedtime story. We mix music, we mix sound effects, we use a lot of data behind the scenes to figure out how we can best create these for our users. We use a whole range of different narrators and incredible writers.
We’re always thinking of how we can create different types of content for our audience. We created master classes, which are longer sessions with experts who delve into topics like understanding depression, how to live a happier life, how to be more creative, how to eat mindfully, etc.
We have a music section — music is a powerful way to change your state from awake to sleep or stressed to relaxed. That’s been a big hit. Hundreds of millions of streams of Calm music have been played. That’s a long answer, but Calm is a mental fitness solution.
Explain the consumer psychology of packaging this content within a subscription app. Many people say they won’t pay for content because they can find enough for free online. What was the insight that made you believe people will pay a meaningful amount of money for Calm?
It’s a good question. It’s something we got a lot of pushback from investors on in the early part of the journey. And you’re right — you can learn meditation so many different ways. There are hundreds of hours of content on YouTube, there are many books out there. But we did a few things that made Calm special.
First, we have a brilliant teacher, Tamara Levitt, who is an excellent writer and narrator and really resonated with people. Secondly, we brought the content together into one place. The user experience was very strong. We made it very easy. We didn’t overwhelm people with multiple different teachers or complex navigation. Thirdly, the brand we wrapped around the experience resonated with people. “Calm” is such a universally understood word. People want to be calm in this increasingly stressful world.
It’s easy to create content and there have never been more tools out there to do it, but creating exceptional content is exceptionally difficult. That’s why people will gravitate and pay for the premium content out there.
Going back to my point about the different types of content in our app, we want to be with you for life, not just to learn one skill. That’s the key when building a successful subscription business. You want to be useful and valuable for your audience for years to come. We have 70 million downloads today and over two million paying customers, but we see a future where Calm could be as universal and valuable to people as Spotify or Netflix.
The production costs for audio content are quite low relative to films, TV shows, games, etc. A high-quality audio episode doesn’t cost millions like an indie film does (let alone a big studio film). How do you define quality content in Calm’s context and what does it take to produce that?
The cost of content is dramatically cheaper, but it is still difficult. If we take meditation content first, Tamara is a brilliant writer and conveying the principles of mindfulness, teaching meditation in a way that doesn’t put people off and resonates for the right length of time required incredible talent. Putting all this together as amazing content is not something many other apps have been able to do.
One of the ways we presented it was through The Daily Calm, which is a 10-minute meditation. And Tamara ends every session with a different lesson. It’s not a huge amount of content, but the way it’s written is very special. That was a big inflection point for the business when we started launching a Daily Calm each day. It helps make meditation a habit.
On the Sleep Story side, we spent a lot of time trying to figure out how to help someone fall asleep — how to connect and occupy their mind then slowly, imperceptibly take it down to the point where they fall asleep. It involves the pacing of the words, the poetic language, the types of music, the timing of other sound effects.
You’ve mentioned several types of audio — meditations, Sleep Stories, master classes, music. Where do you draw the line with regard to the content formats that fit Calm? Is your vision to expand Calm across all content formats?
We are guided by a mission to make the world happier and healthier. That’s pretty broad. Any way we can bring more Calm into people’s lives, we want to explore. Audio is the soul of the business, but we’re open to experimenting with other formats as well.
So we have something called Calm Body — sort of yoga light — which is video within the app. We have a publishing relationship with Penguin Books and Harper Collins in the U.S. to create books from the content that we create.
What’s your content acquisition strategy? How much content is created in-house versus commissioned to others? And how do you balance quantity versus quality in expanding Calm’s library?
We want to create the world’s largest library of life-changing audio content. To do that, we definitely need to work with a lot of different people around the world. But where we’ve started has been in-house with our small content team. Because we create most of the content ourselves, the margins are very high. It’s very different to a model like Spotify, which has to work with major labels.
As we move into new areas, we are keen to work with everyone from celebrities to professors and scientists, and we could do that within the app or through another format.
Explain to me more of the strategy you’ve taken with incorporating celebrities into the content.
We’ve been inspired by Nike’s journey. When Nike was founded, recreational fitness wasn’t a common thing. There has been a healthy revolution. I see a parallel to what’s happening with mental fitness.
Nike has built this $120 billion company through smart partnerships with talent. Similarly, we can take our message of mental fitness to hundreds of millions of people by working with celebrities who already have audiences.
It’s effective, particularly when the celebrity is authentically connected with the app. LeBron James, for instance, was using the app every day to help him sleep and became an investor in Calm.
For decades, meditation has been associated with religion and viewed as a little bit woo-woo, a little bit out there. It is this extraordinary skill, but it’s had a lot of baggage associated with it. When you get some of the biggest musicians and actors and sports stars in the world talking about it, you change that narrative.
If LeBron James does it, it’s not just for hippies.
Exactly. So we’re just getting started with that strategy. There are many more people we want to work with in the future.
Is content involving celebrities consistently more popular than other content on Calm?
Yes, our most popular Sleep Story is “Wonder,” by Matthew McConaughey. Everyone seems to love it from kids to folks in nursing homes, men and women. Stephen Fry’s story “Blue Gold” is extremely popular as well. People love the voice and they also love that it’s someone they recognize and respect.
Nike can get the biggest stars in the world because it has so much money. How early in your journey did you start working with celebrities? A lot of startups see the opportunity to collaborate with celebrities but are unsure when it makes financial sense to engage them.
We tried for quite a while but hit a brick wall. Awareness of Calm was not substantial and mindfulness was still in this gray area where it seemed a bit risky for major celebrities to associate with it. That changed around 2017-2018.
Stephen Fry was our first major celebrity, and we saw immediate success from that, so I realized it was a smart strategy going forward. But it is not easy for a new startup. You need to get a little bit lucky — one connection that can connect you with someone you want to reach. Once you get the first celebrity on board, it becomes much easier because other celebrities can see that it was well-received in the marketplace. It de-risks the collaboration for them.
How many countries is Calm in now? Where is next?
Our biggest market is English-speaking countries. Over the last year, we’ve expanded our international growth. We’ve got a really small team — it’s just three people and they’ve been busy launching Calm in German, in French, in Spanish, in Portuguese, in Korean.
Any interesting differences between countries in how consumers use Calm?
It’s still the early days so we’re starting to learn more about whether to lead with sleep versus meditation in different markets. We also think carefully about which celebrities we work with so whenever we enter a new market, we kick off with a bang and have locally recognized talent. That makes a big difference that generates a lot of new downloads, plus it helps us get a lot of press. Also our Stories have to connect on a cultural level — there’s quite a bit of work behind the scenes to get that right.
Who is the average Calm user? What are the demographics?
We skew toward ages 30 to 50, but it’s very broad. Tamara created some amazing meditations for little kids, getting them to think about breathing by blowing out candles on a birthday cake or visualizing balloons. And then there are many teenagers, as well.
Any tactics for user acquisition that would be helpful for other entrepreneurs to learn from Calm’s journey?
The first is pretty general but often overlooked — the importance of timing. Making sure you’re playing in a market where you have the wind in your sails, where society is shifting its view on something or there’s been some kind of macro change to fuel whatever you’re doing dramatically. Calm got to about eight million downloads before spending anything on marketing.
Another thing that’s often overlooked is PR — very smart communications. Part of the secret sauce of Calm has been that we’ve been very creative in how we tell the story. We’re always looking for pure opportunities. When GDPR legislation came out, we turned that into a Sleep Story because we thought it was quite long and boring and had hundreds and hundreds of articles written about it.
To promote Sleep Stories, we created an eight-hour long movie of sheep grazing in a field and called it Ba Ba Land — like La La Land — and did a red carpet event in London. That again got hundreds and hundreds of articles.
We had Ben Stein — the actor who played the economics teacher from “Ferris Bueller’s Day Off” with a droning voice — and got him to read a chapter from “The Wealth of Nations” as a Sleep Story. We created the world’s first AI Sleep Story. I’m constantly looking for these opportunities to generate PR.
And in the early days, was that just you as the founders doing that PR or did you make the investment to bring on a top PR firm to help with that?
We didn’t work with a PR firm. Alex and I, the two co-founders, love PR and have good insight into what can make a good story. Alex is a genius with viral marketing — he did the million-dollar home page. We didn’t work with an agency. We had an individual that we’ve worked with for a while in London who is incredibly creative and helps with some of those stories. For entrepreneurs, it’s the quality of the ideas, rather than having an agency at the early stage, that will help you get that first wave of PR.
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