Business Breakdowns
Episode 8 Calm: The Sleeping Giant
Business Breakdowns

Episode 8: Calm: The Sleeping Giant

Calm: The Sleeping Giant

Vinny Pujji is a partner at Left Lane Capital. We cover 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.

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[00:02:37] - [First question] - What Calm is

[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

Calm: The Sleeping Giant

Introduction

Jesse
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 it has had over a hundred million downloads in its history. Amazingly, it has been generating cash flow since its inception. In this business breakdown, we go into details around how Calm discovered its primary use case by leveraging data, how the annual subscription pricing has unlocked their growth, how content sits at the center of their vision, and what the industry landscape looks like moving ahead.

What Is Calm?

To break down Calm, I am joined by my brother Vinny Pujji, partner at Left Lane Capital, a growth stage investment firm focused on consumer businesses. Well, Vinny Pujji, welcome to Business Breakdowns. This is a particularly fun episode because Vinny is my brother and is also the business expert on Calm and several other consumer growth stage businesses. Welcome, Vinny.

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