Today, we will be breaking down Calm. Founded in 2012, Calm is the leading app for sleep and meditation. Today, Calm has over 4 million subscribers and has been generating cash flow since its inception. In this Breakdown, we touch on how Calm used data to unlock a non-obvious source of demand, how the upfront subscription cost has allowed for pure operational focus, and what the competitive landscape looks like moving ahead.

To break down Calm, I am joined by my brother, Vinny Pujji, Partner at Left Lane Capital, an early-stage investment firm.

For the full show notes, transcript, and links to mentioned content, check out the episode page here.

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Show Notes

[00:02:37] - [First question] - What is Calm and what its businesses do

[00:03:31] - How people pay for it

[00:03:55] - The top use cases and value proposition for customers

[00:05:19] - Who started Calm and the unique insights that led them to create it 

[00:05:30] - Major inflection points that drove their business forward 

[00:07:54] - An investor’s perspective on freemium funnel models

[00:10:01] - Key factors that led to Calm’s success 

[00:10:56] - Breaking down their subscription offer

[00:12:34] - Analysis of customer retention and breakdown of unit economics

[00:15:36] - The difference between their unit economics and other consumer businesses

[00:17:28] - What’s unique about Calm from a cash flow perspective

[00:19:40] - Capital efficiency when it comes to customer acquisition

[00:21:02] - How they learned that sleep was a primary use case and making a shift to provide more content in that area

[00:23:09] - Competing with and surpassing Headspace’s popularity 

[00:24:19] - Ways that the future might play out for Calm and the mental wellness industry

[00:25:38] - Other insights that led to a shift from a meditation focus to a sleep focus

[00:26:47] - Designing content with a utility and enrolling celebrities

[00:30:06] - Productizing and monetizing on pre-existing consumer habits

[00:32:07] - Variable versus fixed cost models

[00:33:09] - App distribution and generating widespread brand adoption

[00:36:28] - Simultaneously, a software and a consumer business

[00:39:19] - COVID-19’s impacts on Calm and how it drove their growth

[00:41:19] - Potential contributing factors to Calm’s growth over the coming years

[00:44:12] - Practical brand extensions already being implemented 

[00:45:24] - Risks and challenges that may be faced in the coming decade

[00:46:50] - Integrating new features and other risks that may need to be solved

[00:49:27] - Whether or not switching behavior will affect Calm’s trajectory

[00:51:09] - Bigger players in the ecosystem who could beat out Apple’s app store

[00:53:02] - Lessons for builders and investors when studying Calm’s story

[00:54:52] - Where you can learn more about Calm