For Michael Acton Smith, mindfulness and meditation are among the first principles of life. This is a belief that has shaped Calm as a company from its founding story to its mission statement, all the way to leadership and company culture. While Calm is now used by millions of people around the globe, the journey has been anything but linear. Yet as such, it is one filled with interesting inflection points and learning experiences.
Expect to learn:
- How Calm was founded
- Michael’s key lessons thus far
- #1: Raise your prices
- #2: Help people build a habit
- #3: Go after big markets
- #4: Roll the dice as often as you can
- How to build a mindful company
To Meditate Or Not To Meditate – There Is No Question
One could say that for Michael, it all ended and began with his previous venture Moshi Monsters, a hugely popular children’s game that eventually fell victim to the unpredictability of the kids’ entertainment space. The promising journey that began in 2007 quickly turned into one infused with increasing stress and anxiety, ultimately leading to a burnout.
This is when Michael’s good friend, and future Co-founder, Alex Tew started talking to Michael about meditation and mindfulness. What followed was an escape to the mountains of Austria. “I went away on my own to rebalance myself and become healthy again,” Michael recalls: “I started to meditate.” Inspired by the effect of the newly found routine on his own mental health, Michael went on to read books and research papers on meditation and mindfulness. He diagnosed meditation as an effective way of rewiring the human brain, quickly realizing that it was an “incredibly valuable skill” that had been around for thousands of years, yet had not been brought to the mainstream.
What would happen if one made meditation accessible, relatable, and simple?
Returning back from his retreat, Michael was ready to start building again. He had found the problem he wanted to solve – contagious stress which kept spreading over the globe. He had also found his solution: meditation and mindfulness. The end result was Calm, which Michael founded with Alex in 2012.
Ironically, it had been the “weird and wonderful world of pet monsters” that had opened the doors for a dreadful behemoth to lurk its way into Michael’s life. Yet as a consequence, there was no longer any question on the importance of meditation and mindfulness. Calm was Michael’s way of bringing his realization to life on a world-wide scale. What has Michael learned on the way?
Growth Trajectories, Inflection Points, and the Multiple Founding Moments Along the Way
The journey from the founding of Calm to the present day has been nothing short of strenuous, mainly due to the widespread suspicion towards meditation during the company’s early days. Attracting investors on board and building a solid customer base took time. Yet despite the difficulties, Calm has managed to scale.
When asked, Michael outlines three inflection points in the early days of Calm that were pivotal to its growth. First has to do with pricing, the second with customer retention, and the third with the size of the market.
Calm is a subscription based app. At the very beginning, users were charged 10 dollars a year to unlock all meditation content available. The business was growing steadily, but revenue streams remained modest. Something drastic had to be done to increase revenue, as the company was struggling to raise funding.
The team decided to increase the prices. They quadrupled the yearly price to 40 dollars, expecting to see a radical drop off in users. None was detected. “Raise your prices”, Michael advises, “if you’re building something great, don’t be afraid to charge for it.” During the early days, even a slight increase in price can make a massive difference.
While raising your prices can prove to be highly beneficial during the early days, it alone does little in the long run if the product does not remain stimulating. Helping people build a habit around your product can be a powerful driving force behind customer retention. At least in Calm’s case it was. One of its more popular products is something called the Daily Calm – a guided 10 minutes long meditation that is new every day. “A new lesson, a new quote, a new motivation” Michael lists, “that helps people build a habit and come back every day.”
While Calm started as a pure meditation app, it quickly became an app for meditation and sleep. Currently, Calm’s Sleep Stories are arguably its most popular product offering. Rather than having a story arc, Sleep stories have a so-called story slope. They start interesting, gradually turning more monotonous and bland, until finally the listener drifts to sleep.
Calm’s move into content was partly data driven and partly intuitive – it emerged at an intersection of two opposite ways of operating that is often the breeding ground for the best ideas out there, at least according to Michael. On the one hand, everyone wants to sleep better, and many people in Michael’s close circle of friends were suffering from insomnia. On the other hand, Calm’s own data suggested that people were using its meditation content not to meditate but to fall asleep: they experienced a spike in users every evening around 11 pm. Taken together, the result was sleep stories.
What was the learning here? “Go after big markets,” Michael says, “meditation is great and a very important part of Calm, but every single human being on earth goes to sleep every single night.” That is 7.9 billion people. “It’s a big market to play in,” Michael laughs, “it is hard to go beyond, unless we go to Mars.”
In addition to the lessons derived from these inflection points, Michael offers a fourth piece of advice for founders.
Calm may stand out in the world of startups due to its strong mental health and wellbeing oriented ethos, yet its hockey stick growth trajectory resembles the typical startup experience. “It is lots of little things that in time compound, and suddenly, it tips and you’re winning App of the Year,” Michael says: “you’ve got to do all of those little things, hiring the right people, getting the right brand, building the most amazing product, and every day, showing up to work and making it 1% better.”
What every founder should remember is that there are different ways of getting on top of the same mountain, is Michael’s final suggestion. “You don’t have to make every decision correct,” he says, “but you need to move fast.” As an entrepreneur, “you’re rolling the dice as often as you can,” Michael says, “you’re trying lots of different things, very quickly, to see what works and what doesn’t.” When something seems to be working, you do more of it. When something does not, you move on. “Fast metabolism is so important for startups,” he concludes.
Building a Mindful Company
If the mission of Calm is to improve mental health on a worldwide scale, it seems only natural that as a company, it has incorporated a set of practices to improve employee well-being.
While many companies talk about work-life balance, Calm has gone a step further to actually create a buffer between the two: a ten-minute-long meditation practice is offered daily and before company-wide meetings. “That 10 minutes is very, very powerful,” Michael states. Not only does it force people to stop for a moment, when practiced together as a team, it also helps bring people closer together.
Calm gives its employees multiple mental health days off during the year. “Just a few weeks ago, we gave our first ever mental health week off to the entire company,” Michael reveals. “The beauty about the whole company taking a week off together is that you don’t have to feel guilty” he says, “there’s no zoom calls you’re missing, no passive-aggressive Slack messages.” According to him, “it was one of the best things we’ve done as a company.”
Not only has the focus on mindfulness shaped Calm as a company through company-wide practices, it has done so through increasingly mindful leadership. “We work so hard optimizing our business, looking at every single metric,” Michael says of the founders. “What if the most important piece of the puzzle is ourselves,” he asks, “if we’re not in a mentally strong place, how do we expect our teams to be?”
Calm is being built on a foundation of mental fortitude, but where will it go next? On stage, Michael flagged out a set of possible future scenarios for Calm: “Could we have a hospitality arm? Could there be retail products? Could there be a magazine?”
We are left waiting for what Calm’s next steps will be.