Calm Co-founder Alex Tew – This Week in Startups with Jason Calacanis

Check out the This Week in Startups Episode Page and Show Notes

Watch the interview here

Key Takeaways

  • The best business ideas involve scratching your own itch
    • Calm came to be because Alex wanted to build a product that he could have used when learning to meditate
  • Early on for a company, having limited capital to work with can actually be an advantage
  • “Companies don’t die when they run out of money, they die when founders run out of energy”
  • “One of the great things about subscription businesses is that if you can crack them, it’s basically like you have an investment coming in every month”
  • One quick way to come up with ideas? – Just flip something on its head
    • Ask – “What’s the opposite?”

Books Mentioned

Products Mentioned

Intro

  • Jason starts the episode with a great point – “One of the things I’ve learned in life – never underestimate ANYONE” 
    • Extrapolate that:
      • Don’t underestimate any product
      • Don’t underestimate any market, especially as an investor
  • Alex (@tewy) is the co-founder of Calm, the meditation app
    • Jason’s is an investor through his AngelList Syndicate
      • Here’s a great article Jason wrote related to his

The Million Dollar Homepage

  • Alex is the brains behind this website
  • He created it in 2005 with the sole purpose of making $1 million, as he was fairly broke at the time
    • In short, it’s a million pixels of advertising space sold for $1 each
    • “It was a little bit of a hair-brained get rich quick scheme, but it worked”
      • Within 4 months, the site got traction, and he sold out of ad space – there are currently 3,000 ads on the site
  • At a party Alex was invited to because of this site, he met his Calm co-founder, Michael Acton Smith
  • “Calling it a get rich quick scheme is the negative spin on it, but I looked at it and thought, ‘This is a brilliant growth hack…somebody who’s got an insight into how humans think and behave, how society operates, and how the media works.'” – Jason

How did Alex get the domain “calm.com”?

  • A good rule of thumb from Jason – any word in the dictionary, as a domain, under 6-7 characters, is worth A LOT
  • Alex and his team paid $140k for the domain
    • The guy who owned it wanted $1 million
    • Alex calls it a “good deal”

Meditation

  • What did Alex see about meditation before it became popular?
    • “It was actually just a personal interest. I thought that if meditation was benefiting me, it would benefit others too.”
      • Alex started meditating when he was 15-years-old (in the early 2000s)
  • “Meditation is just training in mindfulness – how to be more present, have more awareness, and how to focus on ‘the now’ rather than getting carried away by thoughts of the past or future”

The Origins of Calm

  • “I thought that if I could create a website then maybe others could go to it and learn to meditate in a simple way”
    • “It was really about how you could take this practice and make it more accessible and contemporary for a modern audience, most of whom are probably skeptical”
  • Alex says he also wanted to build a product that he could have used when learning to meditate
  • “The idea with Calm was to make a product and a brand that people could relate to in this busy, modern world….to create something cool, and make it accessible and contemporary”

More on Calm and Tech

  • Addiction to social media has been correlated with anxiety, depression, and other mental illnesses
    • Especially in children
  • Calm is using gamification to encourage people to keep meditating
  • Calm as an app:
    • “I think we’re just at the start of a very exciting time for seeing the positive effects that phones can have. The technology in and of itself is not inherently negative, it’s what we’re using it for.”
    • “You’ve got the smartest minds in Silicon Valley figuring out how to capture more of your attention [Facebook and Twitter]. There needs to be a counterbalance, and Calm is part of that story.”

Early Failures

  • “Not a lot of people believed in Calm early on. It wasn’t actually easy to raise money in the early days….we’ve been turned down by soooo many investors over the years.”
    • Then Jason came along (along with a few other friends of Alex’s who invested)
  • Alex recalls being in several VC meetings where the idea was “slammed” – “That just gave me more fire”

Capital Constraint

  • “Capital constraint is fantastic in the early days”
  • Early on, Calm raised $1 million in two investing rounds ($500k twice)
    • “This constraint on capital meant we had to be really efficient, and not go crazy hiring or spending money wildly”
  • Alex says Calm never really had much money to spare
    • He recalls at one point (after those early investing round) getting down to <$10k in the bank
    • “But you can always get more money if you need it. Companies don’t die when they run out of money, they die when founders run out of energy.”

More on Calm

  • Early on, the app only cost $10/year 
    • Looking back, Alex calls it “very underpriced”
    • Alex and his team eventually realized their mistake, and soon raised the price of the app to $40/year – “The revenues rocketed”
  • Calm was voted App of the Year by Apple in 2017
    • Alex says Apple never told him or anyone at Calm about the achievement before making the announcement
    • “I think they were trying to send a message that you can use the phone for good things”

The Key Catalysts for Calm’s Growth

  • Raising the prices, as mentioned
  • Hiring a brilliant CTO (Ben Dowling)
  • Making the meditation content better
    • This was in part through the hiring of Tamara Levitt as “the voice of Calm”

Calm Today

  • The last round of funding raised valued Calm at $250 million
  • “One of the great things about subscription businesses is that if you can crack them, it’s basically like you have an investment coming in every month”
  • The growth…
    • In 2014, Calm did a few hundred grand in revenue
    • 2015 – $2.3 million
    • 2016 – $7 million 
    • 2017 – $22 million
    • At the time of this recording, in 2018, Alex estimated that Calm would hit $80 million for the year and north of $100 million in revenue for 2019
  • Calm has over 1 million paying subscribers
  • “Ultimately, we are building what we think is a lifestyle brand, with the simple premise of bringing more calm into the world”
    • Just like Nike built a brand based on the physical fitness movement – “We’re trying to do the same, except for mental fitness. Ultimately we want to become Nike for the mind.”

Other Cool Calm Features and Products

  • They recently launched sleep stories for kids
    • Alex says they’re designed to get “less interesting” and the reader’s voice actually gets softer – this helps the listener start falling asleep
  • There’s also the Calm book
  • Also, check out the Calm Sleep Mist Spray

Do Nothing For 2 Minutes, Checky, and How Alex Comes Up With Ideas

  • One of Calm’s most successful ads was done via Instagram
    • It said something along the lines of “Hey! Stop scrolling and do nothing for 15 seconds.”
  • Related to this – Alex, and former Calm CTO Ben Dowling, are the creators of donothingfor2minutes.com (this was before Calm)
    • It was built solely for fun, but ended up going from 0 to 1,000,000 visitors in just a week
    • “Only 50% of the people who came to the page could last the full 2 minutes”
      • Alex and Ben made sure to collect the emails of people who made it to the end of the countdown – they used this email list to help launch Calm
    • How did Alex come up for the idea for this website?
      • He asked himself – “What would the simplest website in the world be?”
      • “I love the idea of just probing and asking questions, and just seeing what your brain comes out with, and just going with it”
  • Alex also created Checky (in the midst of running Calm)
    • How did it come about?
      • Simple…again. Alex thought – “What if we had an app that told you how many times you checked your phone?”
    • It was built in a day, launched, and the next day Stephen Colbert talked about it on his show
      • This brought the app a ton of traffic (lots of this traffic eventually made their way to Calm)
  • “It’s fun to step out of the day to day occasionally and just come up with these random, silly ideas that might help the main company”

If Alex were to create a new social media network, what would it look like?

  • “I would think about creating a social network that doesn’t demand your attention, or perhaps rewards you for not using it that much”
    • Perhaps the less you used the network, the better it would get, or you could only access it if you hadn’t used it for a while
    • A great point:
      • One quick way to come up with ideas is to flip something on its head. Just ask – “What’s the opposite?”

A Great Quote

  • “How can you be happy unless you’re actually in the present?”

Random

  • Jason recently dove into the Who is Michael Ovitz? audiobook
    • “This is the GREATEST audiobook”
    • He’s been listening to it in bed before falling asleep

These notes were edited by RoRoPa Editing Services

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