Building Calm: From App Idea to $2B Valuation

Strategic pricing adjustments can optimize revenue even if conversion rates drop.

"We made it $40 then it was $50 and then $60... Each time the conversion rate would be lower, but the net of it would be that we would make more money."

• Increasing price improved revenue per user.
• Higher lifetime value allowed reinvestment in growth.

Strategic partnerships can accelerate growth when aligned with company values.

"We've always made sure, you know, we have this acronym ICE... The I is for invest... The C is content... And then the E is engagement."

• Engaged celebrities as investors, content creators, and users.
• This approach deepened connections and expanded audience.

Persistence is key when facing repeated rejections in fundraising.

"We went up and down Sandhill Road and struck out and it was really frustrating... We felt we had something special."

• Kept costs low and focused on profitability.
• Continued to believe in the product despite skepticism.

A compelling story can drive market interest and success.

"Business is so much about storytelling and the Million Dollar Homepage had a great story... The attention gave it oxygen and made me money."

• Unique stories attract media attention and users.
• Storytelling can amplify a startup's reach.

Understanding your market's behavior is crucial to sustaining growth.

"I didn't realize this because I'd never built a kids' entertainment company before, but kids moved on... We did everything we could to try and turn it around, but we couldn't."

• Recognize when a market is volatile and plan accordingly.
• Importance of adapting and diversifying products.

Strategic hires can profoundly influence product direction.

"One of the key turning points... was... we had the idea to create the Daily Calm... Tamara Levitt, who was the initial and early voice of Calm."

• Tamara brought expertise and became the voice of Calm.
• Introducing daily content increased user engagement.

Innovative marketing can significantly enhance user acquisition.

"We came up with this idea of do nothing for 30 seconds... And the ads were so successful and so, so profitable for us that we were able to scale that channel up massively."

• Used non-traditional ads that didn't look like ads.
• Scaled revenue rapidly by cracking user acquisition.

Paying attention to user behavior can reveal new opportunities for product development.

"We realized that a lot of people were falling asleep to Tamara's voice in the evening about 11 o'clock at night. So they were using her voice to help them drift off... And we adapted the product for them and thought, um, yeah, why don't we create a new type of content?"

• Data showed users listening at night, leading to sleep stories.
• Sleep stories became a significant growth driver for Calm.

Overcoming investor skepticism is often a hurdle for startups in new markets.

"It was actually much harder than we had anticipated... The biggest concern people had was how is this going to be a business, you know, made it, you know, build a business around calm. You're going to bring meditation, like are people gonna pay for that?"

• Persisted despite hundreds of meetings and rejections.
• Eventually raised $400,000 from individual angels.

When facing burnout, stepping back can provide needed clarity for founders.

"I was just, yeah, really struggling, um, with the business and burnout and lack of sleep... so that was a really important trip for me and it was unusual as well because it was on my own. I just was alone with my thoughts..."

• Taking time away can help recharge and gain perspective.
• Michael realized he needed to focus on Calm full-time after this break.