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The Calm Story: Building the World’s First $1B Mental Health Unicorn

Michael Acton Smith gave attendees at Hustle Con an in-depth look into how he built a unicorn on the back of the mindfulness trend.

Sam: So this next speaker is a good friend of mine. We actually covered him in Trends and I was floored by his story. His name is Michael Acton Smith and he’s the co-CEO of Calm. I’m a big user of Calm, so I love them for that reason. But I also really like this company because it’s one of the most efficient businesses I’ve ever really read about. Calm has 80 employees and they do about $2 million in revenue per employee. They’ve only been around for seven or eight years and they built a wonderful company that has a product that’s used by over 60 million people. And so Michael’s going to tell us their origin story and how they made it all happen. So let’s give it up for Michael Acton Smith.

M. Acton Smith: Thank you, Sam. Hey everybody. I’m Michael and I just love this space. Such a beautiful theater. Actually last time I was here I was sitting in the audience and I just moved to California and I came to Hustle Con. This is several years ago and I sat and I was so inspired by everything I heard. I was scribbling notes frantically throughout the day and the Headspace founders were up on stage and I was gritting my teeth, gnashing away saying, “One day I want to get up on that stage and tell the Calm story.” So pretty cool to be here and I think that’s part of the magic of this Hustle community. One year you’re in the audience, the next year you’re up on stage. So I’m telling the story. So without further ado, I’d love to share with you the Calm journey. It’s been a pretty extraordinary ride and I want to share a couple of lessons that we’ve learned along the way.

So Calm is simple. Our mission is pretty simple. We want to make the world happier and healthier and we’re based here in San Francisco. This is our team earlier this year and a extraordinary team of 10 X as Sam mentioned, very nimble, very efficient given the kind of scale of business we’ve grown to. And we were founded back in 2012 in London, in Soho on a sofa. And this is my co founder Alex Tew. And we used to spend hours every evening we shared a house playing video games. And while we were playing video games, particularly FIFA on the Xbox, that was our favorite, we would just talk about business and ideas. We so kind of love business and entrepreneurship and taking the crazy ideas bubbling around our head and putting them out there in the world. And we were both unemployable, so we kind of had to do this.

So we had many projects and businesses over the years. One of Alex’s was particularly successful, his first big hit, I don’t know if anyone remembers this, The Million Dollar Homepage, and this was a crazy idea. He said he wanted to sell a million pixels on an empty webpage and become a millionaire. And again, everyone thought he was bonkers, but he did it four months later. And my first foray into entrepreneurship wasn’t quite so successful. I was a rock entrepreneur as a seven year old. You can see my little hand drawn sign at the side there. What a genius idea, I thought selling rocks, very low, zero cost of goods, big, big fat margins. But I learned pretty quickly that no one wanted to buy my rocks. I learned some a while ago that there was an entrepreneur back in the 70s who created the Pet Rock, a guy called Gary Dahl and he put little eyes on his rocks and put them in a packaging container with straw and became a multimillionaire.

So that was an important lesson, adding a little bit of value to whatever you’re selling. But I licked my wounds from the rock experience and I’ve had a few other businesses along the way. One in particular that I loved was Moshi Monsters. This weird and wonderful world for children where they could adopt their own pet monster and that grew to tens of millions of users. But the kids space is very fast moving. Entertainment, particularly kids entertainment, you can be hot one minute and not the next. And we thought we’re going to be the next Disney and then that company came down pretty quickly. So a lot of lessons learned there. But Alex and I back on the sofa were sitting and ruminating and Alex had this suggestion one evening. He said he’d come across the domain name that he thought was pretty cool,

C-A-L-M, some people don’t quite understand my English accent when I say that. and I thought, “Wow, what a great word.” Universally understood the world didn’t seem to be getting any less stressful. What an empire we could build. And we riffed on this and discussed it endlessly and I said, “How much is it?” And he said, “It will be about a million pounds to buy.” And we were like, “Oh okay, maybe, maybe not.” But we just couldn’t get this idea out of our head. And Alex is very good at just throwing viral ideas out there and he had put this website up called That was a much cheaper domain name about $10 on GoDaddy, not quite as memorable, pros and cons. And this is something I always recommend when starting a new idea or a business, the minimum viable product, how can you just test it and hack something together really quickly. And there was really interesting learning from this.

The idea was you just go to this page, these beautiful waves and do nothing for two minutes and there’ll be a countdown and you couldn’t move your mouse or your keyboard, and surprisingly very few people could do it. In our always on accelerated culture, it’s kind of hard to sit still. And this was like, “Wow, maybe there’s something here.” This was shared millions of times and went viral and at the end of it, we asked people to enter their email address. We captured about a hundred thousand email addresses, which then became the seed when we launched Calm eventually. So really good to test and try things out initially. So we were chatting about Calm and as I say, we felt the world was getting more stressed when we really felt there was something here and we were negotiating with the guy that owned the domain name and we offered him 5% of our nonexistent company. And he kind of wisely turned us down because we were just two chances trying our luck, but that would have been worth about $50 million now.

So we did buy it eventually for a lot less than a million dollars. It’s about a hundred thousand, still one of the most expensive things we’d ever bought. But we felt there was real magic in owning that domain and it helped us get some of our early angel investors on board who thought there was something special here with this unusual way of starting a business. And as I say, we felt that there was something massive going on. Stress is the health epidemic of the 21st century, not just any stress but chronic stress. The adrenaline and cortisol that pulses through so many of us is causing so many problems on mental health but also physical health as well. And we thought, could we build a new type of business, a brand and empire that could help arrest that? We didn’t know exactly how we were going to do it but we felt meditation could be a great starting point and Alex had been meditating for many years before myself.

I’ll be honest, I didn’t really understand it. Like a lot of people, I thought meditation was a little bit weird, a bit woo woo. I thought you had to sit in this strange position and wear unusual clothing and I was a bit resistant, but I did one of the best things I’d ever done when my previous business was struggling and going through really tough times. I went away on my own and had a solo holiday, which I highly recommend you get away from the coal face and only when you’re quiet and silent away from all that noise do you really start to hear the stuff that you really need to hear, that your body wants to tell you. And I tried meditating, and it wasn’t easy at first, but the light bulb started to go on and I’m an avid reader and I took a bunch of books with me and research papers and the light bulb went fully on and I realized that meditation wasn’t this weird, woo woo thing.

It was neuroscience. It was a way to rewire the human brain to calm our amygdala and put more control into our prefrontal cortex, to respond to situations in life rather than what most of us do, which is reacting. As soon as we get a stimulus, we do something about it immediately. That pause that meditation gives you is transformational. And it’s been probably the most valuable skill I’ve learned in my life. And incredibly important as an entrepreneur that’s always juggling lots of things. So that was kind of the starting point. And we thought, “What if we could make meditation simple and accessible, almost rebrand it from the image that many people thought.” And we connected with an incredible teacher in Toronto called Tamara Levitt, who started writing and narrating our content. And so Calm slowly started to grow. And we were surfing a wave.

The science behind meditation and mindfulness has been really growing over the last few years showing the link between it and so many different health benefits and so that helped fuel the growth of the company. And then fast forward a few years, it’s been just an extraordinary rocket ship. We won app of the year from Apple. We have an NPS score of 74. We became the world’s first Mental Unicorn earlier this year. One of the things we’re really proud of is a study of 200,000 people that showed that Calm was one of the happiest apps in the world and the ones that make us least happy unsurprisingly are our games and social media. So it’s been a wild ride, but it wasn’t always like this. It’s been a very challenging journey along the way. This was us less than three years ago, our nine people in the company in a little one bedroom apartment in Soma here in San Francisco with big, big dreams.

 And we’d raised a seed round a few years earlier and we thought our A round would be pretty straightforward. We’d got to several million downloads organically. We were making a reasonable amount of revenue and we went down to Sand Hill Road and we met a ton of people and the usual story got lots and lots of nos back. And I think we realized this was a really important lesson. I don’t think we were telling the story in the right way. I think a lot of the investors saw us as just a meditation app. And market is so important when building a new business. It’s arguably the most important thing. It’s more important than team, more important than product play in huge markets. They’re incredibly forgiving and there’s a massive amount of opportunity when you’re surfing a wave of something massive. So when we started to reframe what we were doing less as a meditation business, which probably is about a billion dollars of revenue a year, I think the VCs were thinking, we talked about Calm as a health and fitness company, health and wellness, that’s a $4 trillion industry.

 There’s a lot of opportunity there. And that started to change things, but we still struggle to raise money when we urgently need it. Cash was running out and we had to get creative so we had no choice but to make the business profitable and kept costs to an absolute bare minimum. And I was giving a talk a few years ago and someone from Penguin Books was in the audience and she emailed me afterwards and said, “Would you like to create a book of your app?” And we were like, “I hadn’t thought of that, but why not?” And after a little bit of negotiation, we got a $200,000 advance, which kept the lights on and was a really valuable creative way of financing the business. My very first business I launched, we couldn’t raise money. And me and my co- founder sold our bodies to medical science to raise a few thousand pounds, testing out a new anti migraine drug.

So whatever it takes entrepreneurs can usually find a way to finance the business if they deeply believe in it. So we thought, as I said, we can raise money if we kind of reframe what we’re doing. And this was a really important graph when we started to look at our data a few years ago, when we were just a meditation app. We saw this massive spike every evening about 10 o’clock. People all around the world were using Calm, the voice of Tamara to help them fall asleep. And that’s not what we intended, but that’s what our users wanted. And we realized there was a huge unmet demand of people who wanted to calm that racing minds at night to help them fall asleep. So we created something called Sleep Stories and it was an instant hit. It’s now actually bigger within the app than meditation.

And we’ve had 175 million lessons of these sleep stories. Again, this is another important lesson. Keep things simple. All we did was re-invent the bedtime story. There are so many different ways to try and help people fall asleep from sleeping pills to gadgets you attach to your head, but this was very, very simple and incredibly effective. We mixed music and sound effects and a great narrators. The most popular is Matthew McConaughey who, in his Texan drawl, tells a story called Wonder and people love it, although the only complaints we’ve had are from husbands who’ve been writing in saying all their wife wants to do in bed these days is listen to Matthew, but most people are very happy with the Sleep Stories. And then as I say, “Where could we go beyond that?” Health and wellness is such a huge area.

And we expanded Calm into music, into yoga light, into breathing exercises and a whole host of others. And again, over the last few years, as I mentioned, this has been such a massive shift. Mental health has gone from being something we don’t talk about to something many people do. Politicians, celebrities, people are opening up and being run vulnerable. And this is so, so important because we see mental fitness as the new physical fitness. Why don’t we look after our precious minds the same way we do our bodies? And I think this is such a massive revolutionary change and it’s helped fuel the growth of Calm over the last few years. So one of the things that has helped Calm grow is that we don’t take ourselves too seriously. I think this is another really important lesson. If you want to build a brand that people really connect and love, add in a sprinkle of playfulness. And so we’ve done that.

Meditation and sleep can be quite clinical and serious subjects, but to promote sleep stories, we created an eight hour movie called Baa Baa Land. We hired a theater in Lester square with a red carpet and got some sheep to walk down it. We had Ryan Gosling and tons of journalists turned up and we got a load of coverage for it. When GDPR legislation came out, we turned that into a Sleep Story because we thought it was a little bit boring. I don’t know anyone that’s managed to stay awake listening to all of that. Again, huge amount of PR we got for that all around the world. One of our first sleep stories was based on Ferris Bueller’s day out, the teacher with his droning voice and that economics class and we tracked him down and got him to record a sleep story.

 So the slightly unusual left field ideas, PR has been a big secret weapon for us fueling the growth of the company. So, where next? Well, we built this app, we have a great digital soul to Calm, but one thing we’re excited about is how do we take this brand offline? As important as the online world is, we all live in physical space and could Calm grow beyond the digital? And one of the scribbles I’ve been most inspired by over the years was this 1957 drawing by Walt Disney of how he saw the empire growing, how music connected to licensing, connected to books and comic strips and, and how you could create one big ecosystem. And with my kids entertainment company, Moshi, we thought of that in a similar way. The digital heart with all the physical elements orbiting around it. And not only do these create new revenue streams, but they are on-ramps into your digital, high-margin experience, the new ways for your customers to connect and talk and fall in love with your product.

The light little marketing bombs you can sprinkle out there growing the core. So that’s something we’ve been thinking carefully about Calm. How in the future can we expand? Does it make sense to create more books or a magazine or clothing. We’d love to do Calm hotels optimized to help you sleep, which would be a lot of fun. One of the ideas we’ve talked about is to buy an island, which we didn’t mention to our investors before our recent rounds, but love the idea of creating the world’s most relaxing resort, which could be a fun place to host Hustle Con one year in the future. So lots of these quirky, big fun ideas. As I say, business should be playful. It should be fun. It should be enjoyable.

And where do we go beyond this? Well, could Calm become one of the most valuable and meaningful brands in the world? A decade or two ago, the oil companies were dominating and now we’re in the era of big data and big tech companies. But what about health and wellness? Wouldn’t that be amazing if there were some health and wellness brands that were worth tens or even hundreds of billion dollars in the future? Could we create the Nike of the mind? We hope so. And I wanted to thank you all very much for listening. And if you haven’t tried Calm, give it a go. Thank you all very much.


Sam: All right, let’s answer some questions, shall we? They’re going to be right here behind you or in front of you. They’ve been voted on, so let’s just start with the top. Who do you consider to be competitors?

M. Acton Smith: Yeah, I think there’s about a thousand mindfulness and meditation apps in the app store now. It’s incredibly crowded and there are some people prefer some with different voices and different ways of teaching and we encourage, we think meditation is such an important, valuable universal skill for seven and a half billion people. There’s definitely enough to go around. Calm and Headspace are probably the two biggest in terms of revenue and kind of impact and what we’re trying to do, as I mentioned during the talk, is go beyond just meditation and mindfulness to be a mental fitness solution for every aspect of your life. If you want to give up smoking, combat fear of flying, be a mindful eater. That’s kind of where we’re thinking about that

Sam: And interesting fact, Headspace spoke here two years ago and you were an attendee.

M. Acton Smith:  I think it was three, two or three years ago. Yes.

Sam: And you were an attendee.

M. Acton Smith:  I was sitting listening and yeah …

Sam: I was like, “What is Michael doing here?” I guess you were checking … I didn’t know that you had Calm at the time.

Sam: Yes, we were just hitting our inflection points around that time. Awesome. Let’s talk about, actually someone tweeted at me and I’ll bring that question up. You guys do paid advertising on podcasts a lot. How has that been? What’s the ROI on that been and what have other profitable channels been for you? You told me how much you guys spend. Do you say how much you guys spend?

M. Acton Smith: Yeah, well we spend many millions of dollars a month on paid marketing. We got to about 8 million downloads without spending a penny on marketing. And I think this is a really important takeaway as well in that paid marketing is sort of the gasoline you throw on the fire once it’s burning. Focus obsess on the product, getting to product market fit first, so yeah, but now we ramp up that in the organic and the paid is about half and half. Facebook, obviously is the dominant channel and all the usual suspects as you can imagine. And then we’re very experimental. We’ve tried everything from TV, which is quite a complex beast to podcasting. One of the most interesting things we’ve tried is partnerships and they can be incredibly effective. So we did a partnership with Express Spa at the airports and I don’t know if anyone’s seen it. We travel a lot and we see the Express Spa locations and we thought, “Wouldn’t it be cool to have a Calm logo there?” Hundred million people will pass those every year. So for anyone in the audience, if your business is there a much bigger partner that you could connect with-

Sam: Do you pay for that?

M. Acton Smith: We looked, we invested in the business and as part of investing, that was a ask.

Sam: Can you reveal how much you invested in it to get that?

M. Acton Smith:  We haven’t, I don’t think we publicly reveal that. It’s several million dollars.

Sam:  So you gave him several million dollars, then you’re partners in the company and the logo goes on all their stuff.

M. Acton Smith: Exactly. And we thought Calm could help, we could drive footfall to their stores. They could-

Sam: Why didn’t you just give them a few million dollars instead as a fee instead of taking-

M. Acton Smith: Well, because then we are an investor. We have a board seat. We kind of are connected to the business in a bigger way.

Sam:  Super interesting.

M. Acton Smith: Yeah, so that’s … Yeah, we like quirky partnerships.

Sam: Let’s talk about the top question that’s unanswered. Do nothing for two minutes, your partner’s really good at making stuff popular. I’ve gotten to know him. He’s really talented.

M. Acton Smith: Alex Tew, yeah, he’s a viral genius. He’d be better answering this than me. But some of the other stuff he’s done, I don’t know if you remember him when someone threw a shoe at George Bush a few years ago. During the shock and awe kind of battle in the Middle East and Alex created a website called Sock and Awe where you have to throw a shoe at George Bush and that went super viral. So just always think of being these unusual ideas. He, I think he seeded it with a few people that he knows that started sharing it. And I think the usual way is there’ll be one article that gets written and then that article gets picked up and a few other places and again, just caught the magic in a bottle with it. You never know. For every one that does work though, there’s probably 10 or 20 that don’t quite work. So you’ve got to roll a lot of dice.

Sam: Let’s answer the second to the top. And I actually asked you this question a few months ago and I’ll let you answer and then I’ll tell you what you told me before if you don’t mention it now, the next big opportunity in the growth space.

M. Acton Smith: Oh, the next … so the second one from the top.

Sam: Oh, Sorry. Yeah. Then we’ll do Matthew McConaughey.

M. Acton Smith: Okay. Well I think as I said, health and wellness is such a massive, exciting opportunity there. There’s an awful lot going on there. And as entrepreneurs, all of us are looking for these inflection points in society where society shifts its perspective on something. So we saw that firsthand with meditation and how powerful that’s been and it’s happening all the time. So one example is psychedelics, how they have gone from being demonized by society for decades to potentially being the one of the key solutions for helping arrest global depression and mental health issues. So we’re seeing similar things with plant based diets and looking for those areas that are about to shift I think is really valuable.

Sam:  We don’t have much time left or no time left. Do you want to quickly talk about the domain and Matthew McConaughey?

M. Acton Smith: Yeah, so the domain, that was just a lot of negotiation and patience. Alex and I love poker, so we just waited and waited, patient until the guy came down and got it to a much more realistic level. Matthew McConaughey was someone that we just thought would have been brilliant. One of our investors is Sound Ventures in LA. and Ashton Kutcher knew Matthew and mentioned it to him. And Matthew actually gave Calm to a charity that he worked with, to kids and he was like, “Great, let’s do this.” So that was very effective. And for some celebrities we work with, we give a little bit of equity in the business, which kind of creates a really good union and partnership.

Sam: And what’s your Twitter handle? Just Acton?

M. Acton Smith: So it’s just Acton. A-C-T-O-N and Calm is just Calm on Twitter as well.

Sam: So you weren’t able to get to all the questions. If you didn’t get yours answered, they could just tweet at you.

M. Acton Smith: Very happy to connect with all of you. Yeah, over lunch or on Twitter or Instagram.

Sam: Cool. Well, thank you for coming.

M. Acton Smith: Thank you everybody. Cheers.