How I Built This with Guy Raz - Calm: Alex Tew and Michael Acton Smith

Episode Date: May 26, 2025

As a young entrepreneur in the Wild West days of the internet, Alex Tew was drawn to meditation for its simple calming power. Together with fellow tech founder Michael Acton Smith–known for hits like Moshi Monsters–the two brainstormed ways to bring the ancient practice of meditation into the 21st century. In 2011, they bought the domain calm.com, built an app, and started producing meditations and Sleep Stories, narrated by celebrities like Matthew McConaughey and Idris Elba. Despite initial pushback from investors who insisted no one would want to meditate on their phone–let alone pay for it– the Calm app grew to a valuation of nearly $2 billion, with 180 million total downloads. This episode was researched and produced by Katherine Sypher with music composed by Ramtin Arablouei. It was edited by Neva Grant. Our engineers were Patrick Murray and Robert Rodriguez.You can follow HIBT on X & Instagram, and email us at [e-mail]. Sign up for Guy’s free newsletter at guyraz.com or on Substack.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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It had tall windows, beautiful old details, and plenty of space for all of us. And being in that home on Airbnb, right in the middle of Vienna, walking distance from so much of the city, made it feel less like a visit and more like we were actually living there. Plus, taking a trip is the perfect time to host your space on Airbnb. your place with all of its personal touches and its amazing location could make someone else's vacation even better your home might be worth more than you think find out how much at arbb.ca slash host launch a website which you called do nothing for two minutes what was this thing yeah it's it was really a fun exercise that came out of a late night brainstorming session just

You know, what would the world's simplest web page be? Well, it would do nothing. And you would go on it, and it would just have a countdown clock, and you'd do nothing. It wanted you to do nothing for two minutes. Yeah, picture of sunset, sounds of waves crashing on a beach, and if you moved your mouse or keyboard, it would reset to two and say, try again. Wow. Only about 50% of people who went on the page could actually do nothing. Welcome to How I Built This, a show about innovative.

entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raz, and on the show today, how two struggling tech entrepreneurs decided to go all in on an ancient practice, meditation, and built an app that's now valued at nearly $2 billion. Over the past 15 years, meditation, at least in the West, has gone from fringe to fortune. By 2024, the global meditation market hit nearly $9 billion, with about a quarter of that driven by meditation apps. And a few years ago, we told the story of one of those apps, Headspace. And if you haven't heard it, it's worth looking up. Because there are obvious parallels with today's story, the story of Headspace's biggest competitor, Com.

When Com launched in 2012, Headspace had already been around for two years. And coincidentally, independently of each other, both apps were started by British co-founders. And just like the Headspace team, Com's founders, Michael Acton Smith and Alex 2, had a hard time raising money early on. In 2012, a lot of investors just didn't believe people would pay to meditate, especially on their phones. But pay they did. By 2022, Com had more than 4 million.

and paying subscribers. But what makes this story even more interesting is what Michael and Alex were doing before Com. Both had already launched a bunch of internet businesses. For starters, Alex had created something called the million dollar homepage, a viral stunt that actually made him a million dollars. And Michael, he opened one of the very first online gadget shops in the 1990s, back when most brands didn't even know what e-commerce was.

Both Michael and Alex grew up in the UK. We'll hear from Alex in a bit, but first to Michael. He was a student at the University of Birmingham in the mid-1990s, and it was there that he made a friend named Tom Bordman, who would go on to become his very first business partner. I met Tom at chess club. We were both real rock and roll students, and, yeah, we just became great friends.

And the internet was just getting going. You know, we started university, I think about 1993, so it was very, very early days, and Tom was doing a degree in artificial intelligence, and everyone would make fun of him, because no one really knew what that meant back then. People thought you were a bit weird if you were going into internet cafes and banging on about the internet. But we both definitely saw an extraordinary revolution taking shape, and so we had a lot of different ideas, but, yeah, we settled on e-commerce as the starting point.

Which is kind of amazing because even doing it in the U.S., and again, no shade to the U.K., but like the U.K. was behind the U.S., right? Just in terms of the sort of the speed at which the revolution happened. But getting into e-commerce anywhere in the world in 1997 was like totally nuts. People were like, what? What? What? How do you sell through the Internet? It's a computer. How do you sell through that? But I guess you guys start talking about this idea. And at the time, and I remember this, I might still be around, there was a shop in the UK called the gadget shop. In the U.S., I guess it would be similar to like the sharper image, right?

That was exactly it. That was our inspiration to get going. All sorts of quirky gadgets and games and, you know, chairs that would massage you as you watch TV, cocktail shakers, Swiss Army Knives, it just felt like selling these products online would be a really fun thing to do. But we had to solve a lot of early problems because Shopify was not around, Stripe was not around. Tom was obviously very, very good at engineering and was able to solve a lot of these early challenges, but it wasn't easy. Yeah, it's amazing. I read about how you guys moved basically in 1997 time frame.

You moved to his parents' house in Cardiff. Yes. And you use like a spare room in the house to start putting together a website. 1997, 98, like this was a really hard challenge. First of all, most people didn't have access to the internet yet. And if they did, it was dial up. Secondly, building a website, it's complicated. It was really hard to do.

He knew how to do this. He figured it out. We'd been in this bookshop in Cardiff and we saw this book called Doing Business on the Internet. And it was massive. And we bought it. We clubbed our money together. And we both just absolutely devoured it

as if it was a holy script and then we're able to build the first version of the site. And it was still really, really clunky. We couldn't quite figure out how to get people to input their credit cards. So if you wanted to order anything, you'd print off a sheet of paper and fill in your credit card details

and then fax it to us. Unfortunately, we only got about one order every few days. And so we weren't too worried about scaling. I mean, you have this website, and you called it Hotbox. Did you inventory or were you just advertising things that you saw in catalogs? And then people could order them from you and then you would order it from a catalog. What were you selling? Yeah, good, good question.

Well, we put photos of products on the site. And if anyone ordered one of them, we would then go and try and buy it. and wholesalers were not too impressed at selling one unit at a time to us. So often we just buy it from some other location we could find it and sell it for the same price we were buying it for. It was basically just testing things, no margin, and just seeing what products would resonate whether we could actually make this work.

And so it was very, very slow progress. All right, you have a big break. Big break. It's a first break, which is you guys start to sell something called the Shotglass Chess Set. So basically, I'm imagining it's a chess set, but each piece is a shot glass. And this is something you guys came up with. You created this product, right?

Yes, yeah. We were dreaming up all sorts of weird and wild ideas for new products. And we were in a bar one night in Cardiff and saw some tequilas lined up across the bar, tequila shots. And I think in our slightly drunken state, you know, I think I mentioned they looked like pawns on a chessboard. And then it got into a conversation of how. you could make chess more exciting by making it a party game. So we called it the thinking person's drinking game. And you could play with red wine against white wine,

whiskey against vodka, if you're a little more hardcore. But every time you capture an opponent's piece, you have to drink their shot. And usually you don't remember who wins by the end of the game. It's actually a great idea. How did you get it made? Yeah, so it took quite a long time. It was quite expensive assembling all those pieces.

A lot of faxes. Yes. We eventually cobbled it all together. We tested the market by going to a shop that sold loads of magazines and scribbling down the names of the editors and the addresses of these magazines. And then sent out our press release. We took some photos of the chess set. And we sent it off to these editors, personalized everyone. And the hit rate was incredible.

You know, something like half of them came back saying, what a genius idea. We want to feature this. And we were featured in all the men's magazines all around the world. It was amazing. So that was the sort of the tipping point, the start where we thought, wow, you know, storytelling is so important. This wasn't just a chess set. We were telling these editors we were two students building an internet company. And I think it really resonated.

I mean, and this is now, we're talking about 98, 99 here, getting a lot of attention for this shot glass chess set. And meantime, you're having some issues with your name, which is Hotbox. You guys owned Hotbox.co.uk, but you did not own Hotbox.com, which was a different website, I guess. Yes. Have you ever been to Hotbox.com? I have not. No, I promise. Everyone listening, I have not. No, I wouldn't advise it, especially not at work. So we didn't think it mattered that we didn't own the dot com to our name. We love the name Hotbox because our products were so hot. They were bursting out of the box.

But it did matter because hotbox.com was at the time one of the biggest porn sites in the world. So that was a little awkward, especially when my mom, who was so proud of her son, finally, doing something and building a business. She'd tell all her friends to check out her son's new business Hotbox and cause some very awkward moments. So you had to change the name. We changed it to Firebox, which didn't have any negative connotations. Firebox.com. Yeah. And this is, again, the late 90s, and you start to attract interest from investors.

You guys moved to London. And I think you even raised a little bit of money, right, to expand Firebox out. Yeah, so we were building this internet company from this attic in Cardiff, and no one was doing anything similar around then. The bank thought we were completely mad. But then we read an article in a newspaper talking about an event in London called First Tuesday. which gathered internet entrepreneurs with investors, and we both looked at each other and went, wow.

We literally decided to move to London almost the next day. We threw all our things in a van, and... Let's get there before Tuesday. Pretty much. And the very first event we went to, we met an investor who liked the sound of what we were doing, and he invited us into the office. And a couple of meetings later,

we had a half a million dollars of investment and we just could not believe it. So this starts, I mean, you start to really expand half a million dollars, you probably mean, God, you're like 25, you know, years old, 24 years old. I mean, that just must have been mind-blowing to imagine what we could do with this. Did it make any money? It did, yeah. We were profitable from fairly early on.

We got our own office and grew the team to 10 and 20 people. then 30, 40, we took on our own warehouse. So we kind of expanded at a nice, sensible rate. I know that you would eventually leave and start another business. And I want to come back to that in a sec because we're around 2003, 2004. But I want to turn to you, Alex, for a moment, because you're about 10 years younger than Michael. You were also grew up in England. Yeah.

You have a very unusual interest as a, I shouldn't say unusual. It's just I've never seen, in these 700 interviews I've done on this show, I've never had somebody who was like a semi-professional beatboxer. Yeah, beatboxing. Beatboxing is a funny one because at the time when I started doing it, it was, it wasn't something that I knew anyone else did. It was just something that came naturally. And so from the age of maybe four, you know, I was running around the house, just making rhythmic sounds and then took it a bit more seriously as I got older. Yeah. When you get close to a microphone like you are now, is it hard to resist the urge?

Come on, Alex. You know what? When we were setting up, my instinct is to just lay it out. Every event, we always ask Alex to beatbox and every now and then he does it. So, Guy, I don't know if anyone's ever done it on the show. show before, but could, could this be a first? It's not bad. I wouldn't be a competitive beatboxer.

No. I'm not going to make you do it. So, but talk about this because your entree into the internet was setting up a beatboxing website for like a forum, beatboxing. You started this. You were, what, like 15 years old, 16? Yeah, I was 16, 17, something like that. It was actually my second website.

Oh, okay. But it just became this natural idea to create a forum. And so use some software called V Bulletin, which was like the Premier Forum software back in the day. And then suddenly just all these beatboxes from around the world started logging on. It was like the first place. It turns out there were tens of thousands of people also. enjoying the same, you know, the same hobby, if you like.

So it was super cool to like build that community and actually learn better beatboxing techniques. We were all trading techniques on this website. I love this so much because you weren't just doing it. You were like leading it. You were like organizing events. You organized, I guess after you finished high school, what we call high school, you decided not to go to university right away, but to. organized the world beatbox convention in London. Yeah.

I mean, you're 18? That's pretty awesome. Who came? How many people showed up? We had 300 beatboxes from all over the world come to London. And yeah, the event was amazing. We just sort of had this big showcase. I think we may have had a competition.

And I think my entrepreneurial instinct was like, you know, could this become a business? The answer is no. There's not much money in beatboxing. It wasn't enough for me to move out of home living with my parents and decided, okay, I should probably take the traditional path that everyone is encouraging me to take. I should go to university, get a job, and maybe leave the beatboxing behind. So you get to university in Nottingham, and one of the things that you did while you were there was to set up a webpage. You bought a domain called Million. homepage.com.

And tell me what this idea was, because this would, I'm giving away the plot here. It's going to get some attention, but what was the idea for a million dollar homepage? Yeah, the idea was very simple. It was to try and make a million dollars with the silliest possible method, which is to sell a million pixels for $1 each on this one page website. Yeah, it was just one of those. late night brainstorms that I thought, okay, that's, that's quite funny. It's quirk enough that it might just get a bit of attention. To just to describe this for people, it's so crazy. It's like, imagine a collage of just a million, like, logos. And basically, you would sell pixels to anyone

who wanted to put, and then you could just hover your pointer over each pixel and click it, and it would take you to a website. But you start to get attention. I mean, again, I didn't think people should remember. This is like early Internet days where websites would just get attention. Like just a weird website would just get news coverage, right? Yeah.

But people were getting something in return. You know, they were getting an advert that people could click on. And some of those early advertisers got an insane return on their investment. I should mention that the million dollar homepage was to help finance your college tuition. And so that was a great sort of made for media story because, oh, here's this poor college student trying to raise money, but he's come up with this cool idea. Yeah. And every piece of press was making it more valuable. I remember one of the early interviews I did was on the BBC breakfast show. So this is like, Good Morning America, right? But in the

UK. Yeah. And I'm sitting on the couch and they're like, you know, why is this working? And I was like, well, you know, the fact I'm on the couch talking about it is why it's working. You know, It was because of the attention, gave it oxygen and made me money. You earned a million dollars within four months. Yeah, yeah. It was crazy. It was crazy. And so I would open up my laptop one day and just look at all the orders coming in through PayPal.

And there'll just be like a $10,000 payment. And I'm just like, that's awesome. Yeah. All right. This prompts you, understandably, to drop out of out of university because you're thinking look the internet is the way to go i don't want to spend all this time getting a degree is that is that fair to say that you thought i just i need to just focus on on this world yeah it just opened my eyes to what was possible i felt a lot of agency

you know i could i could go and build something and i didn't really want to go to university in the first place i was trying to be an entrepreneur and uh so so dropped out and um and moved to london similar story, I guess, to Michael where all roads lead to London in the UK. I want to turn back to you, Michael, and jump back on your timeline because, you know, you left work with a job with Firebox and you decided to start something new, which was a video game company. And because of, I am assuming, because of your reputation with Firebox and what you guys managed to do, you managed to get some significant funding.

Like, you raised like $10 million to start this video game company called. mind candy. Tell me about that. Yeah, it didn't happen immediately, but one of my loves is games. You know, we've talked about chess, but I love everything from poker to backgammon to scrabble to video games. And around this time, it felt like gaming was going through a huge revolution. Video games had been one or two player. And now we were seeing games with multiple players, sometimes tens, hundreds of thousands of people online. So I just thought the next big revolution would be to make our fun multiplayer games. And so, like the name Mind Candy, that was the starting point.

And we created a game called Perplex City, inspired by a movie I'd seen The Game by David Fincher. Oh, it was Michael Douglas. Exactly, yeah. But I just thought, how cool to turn your life into a game. You don't know what's real and what isn't. So I thought, wow, why don't I try and make a real-life version of that? So that's what Perplexity was.

And to cut a very, very long story short, we buried a treasure worth $200,000 somewhere in the world. And then we set about releasing clues across all sorts of different media. Real cash. You buried it in a real place. Well, we buried, we created a story in all these characters. We buried this cube in a secret location. And anyone that found this secret cube with all these strange engravings on would bring it to our office and win $200,000. That was the idea behind this game. Wow.

Where was it buried? It was buried in a field about 120 miles north of London, and we put clues in the classified sections of newspapers around the world. We had helicopters at live events, and there was these cards that you could buy. If you squeeze lemon juice on them or held them up to sunlight, passwords would appear. And I guess the idea was to make money by selling what? The business model was inspired by Pokemon. We created these puzzle cards, and so you'd buy a pack with six cards and rip it open. But on the backs of the cards, if you put all 256 together, would create this massive map of the world of Perplex City, where all the deeper clues were hidden. So yeah, the idea was to sell these packs for a few pounds each. And it was very, very complex, probably the most creative thing I've ever worked on, but one of the most commercially, disastrous things I've worked on, so I learned some lessons from that adventure. This game was considered, I mean, I think it was widely, like, critically acclaimed.

What was the problem? What happened? Well, as I say, it was extraordinary and incredibly creative, and we had a very, very passionate audience of players, but unfortunately, the game was just so complex that the audience was relatively small. It was a few thousand people. So, you're right, we won awards. We had, incredible publicity, but the commercial piece of it was not there. So this is around 2006, your paths cross, Michael and Alex. You guys meet for the first time in London, Alex, you had come down, of course, to pursue the next thing, big thing in the internet. And Michael, you'd been there building mind candy.

And you guys just met like a random event or a party or how did you meet? Well, I remember reading about the million dollar homepage and I wanted to connect and meet this genius that had created of this. I just thought, wow. And I tried to get in touch with Alex and no joy. In fact, I had some of my investors pinging me saying, who is this guy? Let's find him. And no luck. And then we met at a party, didn't we? A mutual friend. We did, yeah. And I had known about Firebox because I used to log on to Firebox. box when I was broke looking at all the products that I wanted to buy but couldn't afford. And I think I may have even bought a few of them once the millennial of my homepage started working. So I was a fan of Michaels and then we just sort of hit it off from that moment. Definitely. And we got on really well when we met at this event and I was renting a house in Soho, which is right in the beating heart of London. And we had a spare room. And I said to Alex,

Do you want to move in? Yep. And yeah, then we lived together for quite a few years in Soho. It was a great house, wasn't it? Very entrepreneurial. We'd sit playing FIFA on our Xbox in evenings, talking about business and ideas. And we'd throw great dinners and parties.

Most of our friends were building tech companies. So it was a really, really exciting time. So, all right. So you guys are in this house. And meantime, Alex, you start a business. called Pixillado, which I guess is inspired by this million dollar homepage where you're selling pixels of things. But from what I read, it didn't, you didn't quite have the same traction with it. You weren't kind of, it wasn't taking off in the same way. No. Business is so much about

storytelling. And the millions of the homepage had had a great story with Pixelotto. It was, yeah, it was not that at all. And I look back and I sort of, I squirm at the fact I did that as opposed to create something more meaningful, but I think it's just as part of learning, you know, what works, what's worth working on. And I think the reasons for doing Pixelotto weren't, they weren't the right reasons. I was just trying to create another version of the Milling's L homepage, which is not so exciting. Meantime, Michael, you're still trying to get perplexity to gain some traction, but it's really not. I mean, I think you get to a point in 2007 where you have like less than a million dollars in the bank and you guys have raised 10. So you're, I mean, and you're not bringing in any

significant revenue. So tell me about that time. I mean, that must have been quite stressful for you because, you know, that means like this thing is probably going to die. Yeah, it was horrible, really, really difficult and stressful. I would wake up every single. night at 4 a.m. just staring at the ceiling, knowing in the pit of my stomach, and I think most entrepreneurs have had this feeling that it is not working. You can't continue like this. You have to do something, but it was so hard to kind of change, and I didn't know what else to do. And just watching the bank balance dwindle, board meetings were getting more stressful. And then eventually, I thought we have to try something new, a Hail Mary. And within the world of Perplex City,

there was this legend that we had created called puzzle monsters. The world was all about puzzles, and if kids didn't do their homework, the puzzle monsters would come and get them in the middle of the night. It was quite dark. But I love the name puzzle monsters, and even though I'd never built anything in the kids space before, I thought maybe we could create a website for kids.

And I'd loved the Pet Rock story. And then Tamagotchi came along and Neopets. Oh, Tamagotchi were those. like key chains, right? It was like a pet that you take care of. Yeah, a little pixelated pet that you would look after and feed and very, very simple, but nurturing is a really powerful human emotion. And all ages love it. And so we thought, could we create a sort of digital pet, a little monster for kids to look after and feed and dress up and go exploring this world? Yeah. So I basically said, let's try this completely new.

idea. And to the board's credit, they were obviously a little surprise, but they were like, okay, you know, I think they saw the writing on the wall. The money was running out. We didn't really have many options left. So it was one almighty pivot. And we gave it a go. So with a little bit of cash left, we started trying to build this kids entertainment company. Called Moshe or Mashi Monsters. Was it sort of inspired like that name sounds like Japanese? Was it inspired by that kind of Japanese aesthetic? Yeah, we explored lots of different names. We just quite like the alliteration of mushy monsters. And then I didn't want to start it as a completely new company. I felt really bad for all the investors that had backed me and believed me. So I wanted to keep the same cap table,

even though it probably would have been simple to start from a fresh sheet of paper. And again, it was a website that were what, what, kids would like create a pet and then they would care for the pet, like just briefly explain how it worked? Yeah, so you would adopt your own pet monster, you'd give it a name, you'd customize it, it lived in its own room, so you could design what its environment was. And kids don't have an awful lot of control over their world. They're told, you know, what to eat and when to go to school. And so to have their own space, their own online environment where they are in control was

really exciting. And one of the key things we did in this world, we talk about this idea. is stealth education. So the core loop of the game was to look after your monster, but then you would go to the puzzle palace and do puzzles every day, learning mass of the world, how to tell the time. So parents liked it, and definitely not overnight, but after a lot of tweaking, iterating, we got product market fit, and it just took off like a rocket. So how was Moshe Monsters going to make money? Was parents would pay a fee, or a subscription model? How did it work? Well, we just made the decision. Why don't we just make the game free and allow any person that wants to come along, any children to adopt a monster to enable them to do it for free?

And wow, the floodgates opened, you know, dozens of sign-ups the first day, hundreds, day two, the first month. We were thousands a day. It was just, it was incredible. So we still hadn't figured out how it's going to make money. So we just grew the audience and kept improving the product. And then we added a subscription. $6 a month, roughly, I think. It was about that, yeah. And again, very challenging because, you know, it was the parents that would pay, but the kids were the one playing the game. But I think because the parents could see it was a safe world, there was an educational component, that they were happy to do so.

So this is 2008, 2009. And, I mean, from what I gather, it was, it actually hit profitability pretty quickly. Like, you guys were getting, you. you know, within two or three years, like $80 million in revenue. I'm just curious, how did you, how did you get the word out? How did people find out about it? Was it just that the, I mean, it's 2008, 2009.

The internet is still fairly new that it was still easier to get attention for a website? Yeah, it, you know, if you create something incredible for kids that they love, there's the few things that spread faster in the playground. You know, you think of all the big hits from Pokemon. to Cabbage Patch Dolls. Top Patrol. You name it. Yeah, exactly.

All these worlds. And Moshi was at the right moment in time. And one of the really key turning points in the growth of the business was when we decided to do physical products. When you say physical products, toys? Well, a whole range of things. So one of the first things we made was a magazine that featured content from the world. And then we did trading cards. And then we did books.

In fact, the first deal was a book deal we did with Penguin. talking about all the different moshling characters you could collect in the world. And then a music album that went to number four in the charts and a movie with Universal. It was just... A movie. Moshi Monsters the movie. Exactly. Yeah.

And the magic of this was we had two flywheel spinning. We had the digital world and then we had the physical world. And so the two helped the world grow much, much quicker. I read somewhere, and this makes it a lot of. lot of sense to me because I've had, I've encountered this on the show in the past where we've had guests who have started media companies that have blown up. And inevitably, there's a conversation where somebody in the organization says, we're the next Disney. Like, this is just to start. Look how fast we're growing. And I think, I think those conversations were happening at

Mind Candy around Moshe Monsters, right? Yes. Yeah, we, we did think we could be the next. Disney, the future of entertainment. And I think we got a bit too big for our boots, or I certainly did. Disney came knocking and we had some conversations. They'd bought one of our competitors called Club Penguin. Oh, wow. But they came possibly looking to acquire you guys. Yes. Yeah, we never got to term sheet phase, but they were very, very interested. But I was just full of confidence and wanted to keep building and creating new worlds and universe and to be honest, I was just having too much fun. But when you're an entrepreneur, you do need to think of all the stakeholders and investors and employees. Not selling was probably a mistake in hindsight. I mean, in hindsight, right, but I mean, you're on this rocket ship,

right? From the time you launch it, you got movie deals, licensing deals, merchandise, but from what I read between the lines, already by 2012, even with all of the acclaim and attention, you guys were running into problems. What happened? Well, we kind of, first of all, when this happens, you think it's just a blip, and then it happens a second month and a third month, and you think, hang on, what's going on here? And what was happening was that I didn't realize this because I'd never built a kids entertainment company before, but kids moved on. They get bored. Yeah, they become obsessed, and then the new phenomenon comes along. And so as soon as kind of younger kids were starting to play the game. Older brothers and sisters were moving on. And Moshi went from being

cool in the playground to not so cool. And we saw it in our numbers. And we did everything we could to try and turn it around, but we couldn't. Yeah. But you still, you were the hottest tech company and one of the hottest tech companies in London. It's this horrible situation to be in where, you know, I was on billboards and posters around East London. I was being interviewed on TV shows, winning awards left right and center, but knowing in the pit of my stomach and at 4 a.m., that this was unraveling and this was falling apart. This rocket ship suddenly started falling back to Earth. When we come back in just a moment, Michael leaves the frenetic world of Moshe Monsters to work with Alex on something completely different,

an app called Calm. Stay with us. I'm Guy Raz, and you're listening to How I Built This. Hey, welcome back to How I Built This. I'm Guy Raz. So when we left off, it was 2012, and Michael's huge success with Moshi Monsters was starting to unravel. Meanwhile, the whole time he's been building that franchise, his housemate Alex, has been trying to launch his own new ideas, but nothing is jelling. Still, there's one idea Alex just can't shake, and it's sort of out of left field.

Even back when I was a teenager, I was a practitioner of meditation and relaxation techniques and self-hypnosis I was interested in. It's remarkable to me because I don't, I have teenage boys. I was a teenage boy. I don't know any teenage boys who can sit still. What would you do? It was born from a general interest in the mind and in psychology and in self-improvement. So, you know, I read all sorts of books. I read totally. I read totally. Tony Robbins books, I read books about improving my memory. And then there was this one book I read called The Relaxation Response, written by a guy called Dr. Herbert Benson. And he was one of the first researchers into meditation from a scientific perspective. And I remember at the time I was kind of stressed out with exams and the general pressures of being a teenager. And I would just sit and try and

practice and meditation I did find difficult I think at that time it was it was a bit too esoteric I found it easier to memorize relaxation techniques and and then also started sourcing on online but also in quirky bookshops CDs that would have on the whole incredibly cheesy recordings with pan pipes and you know lots of reverb with relaxation things I just thought A lot of this content that I'm consuming is really not designed for a mass audience. It's not very well presented, even though the technique is incredibly simple and powerful. And I even had that thought around meditation. You know, it's been around for thousands of years in various forms.

But to the average person, it's unapproachable. Yeah. And right around the same time, Alex, I think you launched kind of an experiment, a website, which you called do nothing for two minutes, which I've seen. And you can see this on the Internet archive, the web archive. And this was literally a website, and you'd go on it, and it would just have a countdown clock, and you would do nothing. It wanted you to do nothing for two minutes.

And then the clock just runs down and you're just looking at a sunset over the ocean. Was this just a gimmick? Was this going to be a business? What was this thing? It was really a fun exercise that, again, similar to the Millindleyn page, came out of a late-night brainstorming session. Just, you know, what would the world's simplest web page be? Well, it would do nothing. And came up with this idea of this web page, it would have a picture of sunset, sounds of waves crashing on a beach,

count down from two minutes, which would start as soon as you hit the page. and if you moved your mouse or keyboard, it would reset it to and say try again. And I thought it was just a fun idea. And together with a friend, a guy called Ben Dowling, we just built it one afternoon and tweeted about it, and it just went viral. And within a week had about 2 million visitors.

Wow. And funnily, enough, only about 50% of people who went on the page could actually do nothing, like not touch the mouse or keyboard. All right. So something else, I think, happens around this time, Alex, which is that you leave London and you move to the U.S. to take a job. Like, I think at a tech incubator in San Francisco. So, I mean, this was a big change for you, right? I mean, this is a major move.

Yeah. So that was my first, in a way, my first job, apart from working in a supermarket when I was very young. Right. That was my first sort of first proper job, if you like. Yeah. I'm just just curious. I mean, from the time you started a million dollar homepage, right? You made a million dollars, literally.

Obviously, a third of that or more went to tax. But you made a million bucks from that. By 2011, when you left for San Francisco, it sounds like you had not really made any significant money after that. No, no. I hadn't really invested it well. I'd spent a lot. You know, I really needed to, you know, find a way to make.

money and take the pressure off. So I think that was part of it. Yeah. You know, and I think it was an important moment. Move to San Francisco. Learn a lot from the Silicon Valley culture and meet lots of interesting people, which I did. And you and Michael are, of course, staying in touch because your friends and your collaborators. And at a certain point, you buy this domain site. This is, I think, in 2011, called calm.com.com.com. C.A. And we're going to get to what this initially what this idea was. But from what I understand, you'd been wanting to buy this domain for like two years already. You've been negotiating with the guy who owned the domain name to buy it from him.

Yeah. Michael and I would always riff on business ideas. And I think I'd shared my passion around meditation and relaxation. And we talked generally about this bigger idea, this simple idea. And so we discovered that this domain name calm.com wasn't being used. It was owned by this guy actually, fortunately in England, but he didn't want to sell it unless we gave him, I think, something like a million pounds. Just an absurd amount relative to what we could afford. And so it wasn't the right time.

But then at some point in, I think it was the summer of 2011, he was like, yeah, I actually want to sell it. And thankfully, Michael had enough money to buy. I think $140,000 about he sold it for. About that. Yeah. I had earmarked that money for a deposit for a house, so my parents were a little surprised. It's still a lot of money to pay for a domain name. I mean, it worked out, but still, that's a pretty big bet.

It was a huge risk. Yeah, huge, huge bet. But, you know, to Alex's point, we both believed in this word and this opportunity so much. I think it's one of the most beautiful words, calm, is a super. superpower. It helps us in so many ways. So yeah, we thought it was a bet worth making. Yeah. At the high level, the world needs more calm. And I felt like I was probably more representative of the average person who wanted to find a way to relax, really, and calm the mind for 10 or 20 minutes. They're not looking for some spiritual awakening. They're actually

looking to manage stress. I think that was part of the appeal of building. building Calm. Like, could we build a product that we wish existed? Right. Okay. So, Alex, you're in San Francisco. Michael, you are still in London. And you've got this domain name now, com.com. And I guess around 2012, you decide to build a website around this domain name, which is just, I guess initially it just had sounds, right? Like the ocean and birds and like a bubbling brook, you could just kind of like sit. and chill out and listen to these sounds? Yeah, yeah. So that was really the first thing we put up. And it was just something we could get out quickly. We knew that do nothing for two minutes,

that very, very simple website had a lot of attention. And it was kind of a better version of that. Instead of just this static scene with some wave sounds, there's going to be these full-screen visuals. At the time, there weren't many websites you could go to and just suddenly would have a full-screen video playing. So it looked quite dramatic. You had these beautiful scenes of nature with really high-quality audio,

but there was only 10 scenes or something. Where were you getting that video from? Did you have it made for you? Yeah, the first ones were actually made. I hired someone on, you know, it was maybe Craigslist or something, a videographer who went out and filmed some beach scenes in the Bay Area and some other forest scenes and things. It got some really good organic traffic.

I think it was a few hundred thousand people a month using that. So it served a need, albeit millions of users, but there was definitely an audience for it. When you had that website Do Nothing for Two Minutes.com, at the end of it, if you got through it without moving your mouse, it would ask for your email address. And I guess you guys ended up collecting like tens of thousands of email addresses that way. Yeah, yeah, I think even maybe 100,000 emails. And so that 100,000 emails, when we launched calm.com with the sort of nature scenes, those people turned out, you know, they really love Calm.com. So it was a much better version of Do Nothing for two minutes. They got an email.

They got an email. And so that was sort of our initial audience. Basically, it starts as this webpage. But this is already now 2012. The iPhone is out. The app store is open. It's clear that you guys were going to move into that direction. but just initially, just to get something out there, you have this web page with some,

were there guided meditations yet in 2012 or not yet? At some point in 2012, I can't remember exactly when we put them on. I think it was not too long after we put just the scenes up. And the idea of just starting on web was it was super cheap. You know, we didn't need much. But we wanted to have something to prove to investors that, there was interest. And it was free. There was no business model, right, yet. There was no business, no. We were very serious about making it a company. We just started in a very, very simple way.

And when you say we, was it, I mean, are you talking about you and Michael? Michael's in the UK. You're in San Francisco, or did you have anybody else working on it with you? No. When I say we, yeah, Michael and I, so it's, even though Michael was still in the UK, yeah, we would talk all the time. I was super excited to work with Michael and I was just waiting for him to move to San Francisco. And my first sort of job really was to try and raise some money, you know, to actually build up the mobile app, build a small team. And that was kind of the next step. All right. So you had launched in May of 2012, but you now you want to prove this concept out. So you had to raise some money. Given that you were at that incubator and you already

had a track record, was it hard finding angel investors? Or were there plenty of people who were like, I believe in this guy? I think there's something here. Yeah, it was actually much harder than we had anticipated. So it actually ended up taking, you know, a good six months, well over 100 meetings. I think in the end we raised from about 12 people. And they were all individual angels. The biggest concern people had was how is this going to be a business? You know, you're going to build a business around calm. You're going to bring meditation like, Are people going to pay for that? Most investors just thought it was an admirable mission and a terrible business idea. But nonetheless, we persisted and cobbled together just over $400,000. And that was enough to kind of get to the next phase. So you've got some cash to start this up.

And also that month, February of 2013, you debut a mobile app. Did you build the app yourself or did you hire with the money? you raised, did you hire some people? Hired one iOS person and I did the design and then we had a few contractors helping with audio, the meditation recordings. So it was, yeah, it was basically me and one engineer building the app. And what did you get on it? Yeah, so there was, I think there was maybe 12, audio recordings in it, literally plus a bunch, maybe 12 scenes. So there was a course called the seven days of calm and it was 10 minutes stay for seven days and it taught you the basics of

meditation. We actually didn't use the word meditation at that time we thought we're going to teach people this stuff without telling them it's meditation. We later changed our mind on that strategy because meditation became this hugely mainstream thing so we embraced it but at that time we just called it the seven days of calm and there was like a couple of audio recordings for free and then you'd pay five dollars to unlock the full app. There was no subscription. In fact at the time, Apple hadn't embraced subscriptions at all. But it was encouraging because 10% of people who downloaded the Calm app were paying the $5. And that was right out of the gate. So that was a great signal that people would pay for this. It was small numbers and small money, but they were

paying. All right. So let's get back to you, Michael. You are still in the UK. Com has debuted. you're kind of spinning out of running Moshi monsters. And I know that you, I don't know how significant this is, but I read about a trip you just, you had to just get out. I mean, you were like not sleeping. It was just stressful. The business was, you could see it slipping away.

And you decide that you need, this is a summer of 2014, you need a break. And I guess you just got like a room in a hotel in the mountains of Austria. and you just brought some books and you just like got away from it all. But this was kind of an important turning point. What happened there? I was just, yeah, really struggling with the business and burnout and lack of sleep. And I think sometimes as entrepreneurs, you've just got to step away from that cold face.

You've just got to get perspective and realize you are not your business and get into nature and fresh air and just kind of calm your nervous system. 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. And as you mentioned, I was reading books and research papers and just so fascinated by what we were doing with calm. And it really was the really bright light bulb moment going, what am I doing? I need to be working on this full time with Alex. I've got to find a way to make this.

This can't change the world. I just realized that it's a way of rewiring the huge. brain. It's been around for thousands of years for good reason. And so I started practicing myself and realized the value. And if we could make this ancient practice accessible and relatable and simple, we could connect with millions, maybe tens, maybe even hundreds of millions of people. Okay. So you decide that you're going to move to San Francisco. And you're going to throw yourself into this full time. Yeah.

And I think we'd both realize that Silicon Valley was the place to build this business. You know, there was more investors who were open to ideas like this. The climate was more open to it as well. A lot of our friends and people we knew in London were very, very skeptical of meditation and mindfulness and talking about mental health. It was really not the hot, important topic. that it is now. So California was much more open to that. I think another reason was there was just so much more talent who had been at companies like LinkedIn and Facebook and others who had

seen, you know, firsthand how to build and scale companies rapidly. We didn't have as much as that in London. And then finally, I think we both just wanted to prove ourselves in the cauldron of the valley, you know, the most extreme place to build a business. and wanted to see if we could cut our teeth there. So, Alex, you are, you're kind of manning the store in San Francisco. And you launched the app in 2014. You raised another $500,000, almost $600,000 in Angel funding. So, you know, in 2014, the book 10% Happier came out, which I've read Dan Harris's book.

I know Dan. It was a very accessible book. It was talking about all of these people who brought Eastern mindfulness ideas into the West and how he, Dan Harris, kind of went on this journey to learn about it. And I wonder if that book was kind of a turning point just in mainstreaming meditation in your view. I think that book was definitely part of it. I think there were other things going on. I think the body of scientific research was kind of exploding. Yeah.

So there had been this sort of growing wave, this growing swell of interest in meditation and mindfulness. And I think part of what we got right through luck or foresight was just the timing. We were just well placed to benefit from this huge wave. And I do also credit Andy Putakum and Rich Pearson from Headspace. They were, I think, maybe a year ahead of us in terms of getting a nap out. And I think they were also part of that story. But Headspace was, you know, as you say, had been out a year longer. Andy had done a very popular TED talk.

He was getting more attention. Or do you worry that they would dominate the market share and that maybe you couldn't compete? Or did you think, oh, there's enough space will be fine? Well, a lot of investors pushed back and said, yeah, Headspace are the winners. This market has sewn up. But we believe so strongly in what we were doing that we didn't think it was an issue that we were behind. We were closing the gap. And to your point, the market we did feel was absolutely enormous.

It wasn't just the people who were meditating. It was pretty much anyone with a mind. So we felt there were going to be multiple winners. Not a winner takes all market, but a winner takes most. When we come back in just a moment, how common we come back. Tom gets a major boost for people like Stephen Fry, Matthew McConaughey, and LeBron James. Stay with us. I'm Guy Raz, and you're listening to How I Built This. Hey, welcome back to How I Built This. I'm Guy Raz.

So it's 2014, and Com has hundreds of thousands of users and a core team of just four people. But they're about to make one very significant hire. One of the key turning points was around this time when instead of us having all these pre-recorded meditation content for people to listen to that was the same every day, we had the idea to create the daily calm, which was going to be a unique meditation every day. And crucially, one of the most important people in the early days was Tamara Levitt, who was the initial and early voice of calm. She's the one that you would hear, you would hear calm. Yes. That voice, right? Calm.

And that voice is so, it's like Andy Puddy Kum's voice. But she was somebody who contacted you guys, right? She got in touch with you in 2014 to say, hey, you need a community manager, right? Like, well, tell me the story because she would become a turning point for you. Yeah, she applied for our community manager role. And Alex and I got on a, I think it was a. Skype call with her and really liked her and really liked her voice. And I think she offered to do some meditations, didn't she? She'd been a meditation teacher. And we felt her voice and her experience

as a meditation teacher was going to be much more valuable than joining on the community team. And Tamara recorded these and it suddenly made meditation and developing a habit easier for people. You'd come back every day and hear a new story, a new lesson. There'd be an inspiring quote at the end. And even though it was a huge amount of work to create all this unique content, it was a step change for the business. I think you were doing about at least $3,4 million by 2016. Something like that. Yeah, I think the revenue may have even been close to $7 million for 2016.

Millions of downloads now, we thought, now surely people must get it. We must be able to raise a series A. And I don't know whether it was just we weren't good at fundraising or whether people just, the VC community was still not ready or did not see this as a VC scale business. Yeah, we went up and down Sand Hill Road and struck out. And it was really frustrating, wasn't it? Because we felt we had something special. What would they say? I mean, this is 2016.

It's like there's a lot of money flying around Silicon Valley for all kinds of businesses. What was the pushback that you were getting? Because, I mean, these guys are smart. They're going to make mistakes, obviously, but they're experienced, and they have pretty good perspective. I think we had a fair bit of different feedback. I think a lot of people dismissed it as a content app and so very readily copied. You could get free meditations on YouTube. There's going to be thousands of competitors. You're not going to be able to build a moat. And I think a lot of the VCs discounted the fact that we were very focused on brand. and that, you know, it's a little more intangible, and it's hard to believe that that could have become so valuable.

But so we just kept our heads down, kept the costs very low. Yeah, we didn't over-hire. We could use equity as a big part of compensation over cash. We had a one-bedroom apartment rather than some fancy office. You know, well, even before that, we were in just a little co-working space with like 100 other things. startups. So it's just that traditional arc of, you know, being very, very scrappy. And I think we thought, well, we might not ever be able to raise your VC money, so we're just going to have to make this business super profitable. I mean, I understand that you had to make it profitable,

but I want to just dig into this for a moment. In order to grow, you needed money, right? you are now getting some revenue coming in and it's probably certainly very helpful but you're still small 2016 you've got fewer than 10 people you're working presumably really long hours I mean were both of you guys just saying to each other

how is it that nobody wants to put money into this thing it doesn't make sense yeah it was I do remember 2016 being somewhat mystifying and tricky because we felt like we had proven that there's a business here. So it was actually an incredible signal. There's amazing word of mouth.

The market really wants it. We've had some good press. You know, we've got millions of users that have all come effectively, organically. We've tried paid user acquisition, but we haven't quite cracked it. And, you know, there may have been some sense that, well, this business is a nice small business,

but they're not going to be able to scale it. Well, I think one of the things that happened that year, and it may or may not have been a turning point, but you launch sleep stories. And I mean, lots of people, including one of my children, they fall asleep to boring stories every night. And I will come into his bedroom at like 11 at night and turn the story off because it's like four hours long. You know, I was like hit stop on his iPhone. and but this is something you guys started offering on the app in 2016. What did you notice about how the app was being used? Or how did you come to this realization that this was something that was worth trying? Yeah, it was around 2015 where we started to think about it. And I'd been seeing a few signals that there could be something here. So I think there was a podcast.

called Sleep with me, where the narrator would just tell boring, long stories. Still there. Still around. Still going. And Alex and I just chatted about it, and we thought, well, could this be an opportunity for us? And we'd also looked at the data. We had a brilliant person we'd hired called Dunn, who looked at the data with us. And 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. You could see that data. You could see how people were using the app. We saw the spike and we were obviously like, well, hang on, that's not how you meditate.

But we adapted the product for them and thought, yeah, why don't we create a new type of content? We hacked it together very quickly in weeks and created a few of these sleep stories we called them, put it out. And very early on, we could see the signal that people were like using this. And the key thing was that there's still, even today, a fair bit of stigma around meditation. It's not easy for people to develop a regular meditation habit. But everybody goes to sleep every night. So many people struggle falling asleep. And so this was such a absolutely key turning point in the growth of the company.

All right. So now we're in well into, we're now into 2017. And again, like, are you guys using any money to, advertise to do social media ads or is it just you're on the app store and you've got your mailing list and it's just growing organically or are you are you spending money on customer acquisition now we are yeah so at the end of 2016 um michael mentioned done dun wang who uh came on board as our first product manager but actually ended up um doing so much more than just product management she helped do our first successful user acquisition and it was in, I think, January 2017, we had our first million dollar month, and it's because we had cracked the UA code. How'd you do that? Well, the fun story is that we sort of reached back to the past and took the idea of do nothing for two minutes, and we made an advert out of it, and it was do nothing for 30 seconds. And it was a video advert, which was a pretty new format time, primarily on Facebook where we've had first success.

and we had these adverts that didn't look like adverts in people's social media feeds, with rain and a countdown saying, do nothing for 30 seconds. And it just looked very, very different to other ads for mobile apps. And the ads were so successful and so profitable for us that we were able to scale that channel up massively. People shared the ad. You know, it's unusual for people to send an advert to their friends, but they did it in droves.

And so that was a really key moment for us because that meant we could put a dollar into our marketing and get a big multiple of that out. And so we just scaled that up very, very rapidly. So our revenue went from, you know, 7 million to 21 million to 80 million. It was extraordinary. Well, one of the things you guys also did was,

I think you did it the year previously, was you raised the price, which meant that you had fewer people, paying for it. Because there's a free medium. It was free too. There's a free version. But the paid version, you raised a price, which meant that you had fewer subscribers initially, but more money coming in because the price was higher. Yeah. Yeah. So, you know, the very first subscription we had was $10 a year. And then I think in 2015, we made it 40, then it was 50, and then 60. And each time, the conversion rate would be lower. But

the net of it would be that we would make more money. You would have more money to spend on user acquisition would have a higher lifetime value. And it worked partly because, you know, people were willing to pay more for their personal well-being, but also because the app got better and because we built trust in the brand. And so, yeah, the sort of equation for how do we grow this business finally clicked. Basically, you're, you figured out how to grow it without any outside, and a whole lot of outside money. It took you a while to get it. But one of the things I think that also happens is that a few celebrities start to just organically tweet about it, like John Mayer, Stephen Fry, because eventually celebrities, including Stephen Fry, would start to record, you know,

stories and motivation, things like that for the app. How did, was it seeing people like Stephen Fry tweet about it that led to that idea? No, we'd actually been trying to get celebrities to narrate sleep stories for quite a while before that. And we were knocking on the door of Hollywood and trying to reach out to every connection we could. But no one wanted to do it. Calm was still too much under the radar. Unless you paid them big bucks. Well, even then, I think, well, we didn't have the big bucks to pay them. But yeah, even then, I'm not sure people would have done it. But as Karm started to get a little more into the zeitgeist, and as you say, celebrities started to to mention it. And Stephen Frye was one of the first. And I managed to track down his agent and

asked if he'd do it. And after a bit of a negotiation, he agreed. And then the next big breakthrough that really took us forward was Matthew McConaughey. Wow. The story has been one of our most popular ever since. How important were the celebrities in increasing your market share? I think it was really important. Not only did it lead to a lot of of additional downloads, but it gave us press moments. We were able to talk about calm in new ways, and people started to see calm as more than just a meditation or a mindfulness app. We opened up the market potential massively. When someone like LeBron James comes and says, you know, mental health is important, as important as physical health, that appeals to, you know,

hundreds of millions of people. So it was crucial. I think we did a better job. than a lot of the other apps in our space at connecting with the celebrity talent. And yeah, it's been part of our secret source. Another big hit was Harry Stiles. And, you know, he opened up a completely new audience for us. And the great thing about each celebrity that we've worked with is we've always made sure, you know, we have this acronym ICE, I-C-E. So the I is for invest. We want the talent to have skin in the game.

Do you want there to be investors in the business? Exactly. So all the key talent we brought on board are on our cap table. So they really feel they're part of calm. That's important. Secondly, the C is content. We want them to create something unique that they're not just saying go and download calm. They've created something, whether it's a series like LeBron or Harry's Sleep Story.

And then the E is engagement. We want to make sure they actually use. the product, that they have got value from it. And when those three things come together, it creates a really deep, authentic connection between us and the talent. And then the talent, as fans, really connect with calm. So, yeah, it has been a critical part of our success. So you're kind of at this point off to the races. I mean, you're 2018, that Series A values a business at $250 million. You guys raised $27 million. in that round. Yes, that was a big one. Big jump from our one and a half million that we'd done

for the seed round. And during that negotiation, which was quite tense, we won app of the year. So that definitely helped our negotiating position. I bet. Apple called you the app of the year. So that certainly helps, yeah. Because I mean, I'm sure, you know, you guys, even though your experience, certainly, Michael, you had a lot of experience with investors. You know, they have the leverage oftentimes, right? And the terms can be difficult, but you win app at the year changes the equation a little bit. Yes. But again, it's a long journey.

I mean, you launched this thing in 2012. So it wasn't like it was an overnight success story. I think that's the secret to most success is it actually takes a lot longer. And it's more about persistence. And I think, again, time is somewhat of an advantage. It means that, you know, you've put in so much work. It's hard to replicate potentially. I think if we had raised tons of money very, very early, we may have not had the scrappiness to, say, do sleep stories.

We may have just kind of been drunk on, you know, expensive, unprofitable user acquisition. So I think we kind of got the foundations. They were stronger, basically, I think. And you guys have also done some partnerships and acquisitions. I mean, you acquired a company called Ripple Health Group. Tell me about what that means. I mean, does Calm want to start like tapping into the healthcare system somehow? Yeah, we want to bring Calm to as many people as possible. We launched a B2B division where companies pay for Calm for their employees. And that's been a hugely successful part of the business, particularly at the start of COVID.

And the next phase is can we work in the healthcare system in the US? could calm be provided to ensured patients, to ensure that they live a more mindful life, that they get good sleep, that they're conscious of the food they eat and the exercise they take, which the theory is downstream will prevent more physical health issues,

such as obesity and diabetes and others. So last, this is why we acquired Ripple and the team that have such deep healthcare experience. And last year we signed a big deal with United Healthcare to bring Calm to many of their population. So this is a big part of Calm's growth over the next few years. Which is B2B. Yes. Yeah.

So, all right. So 2022, I mean, you guys really, the business is scaling and scaling and scaling. I think by, you know, 2022, you've got, I don't know, how many million. of users, I mean, probably about 4 million paid users by that point. That year, you guys stepped down as co-CEOs and become, I guess, co-executive chairman? Yes. Yes. So the company we acquired Ripple, the CEO, David Coe, because of our push into healthcare and his deep experience in that world, we decided it would make sense to step into a new role. And, you know, that's tough for entrepreneurs. We've been building this.

business for best part of a decade. So it was not a decision we took lightly. But the other challenge was that we had moved back to Europe and London. And most of our employees, hundreds of the team were based in the US. So having a CEO in the same time zone in the same office as our team made a lot more sense. But we're definitely not traditional chairman. We love this business and this brand so much. You know, we often talk about how we can imagine being part of it for all of our lives. So we created Calm Studios in London where we're dreaming up future ideas for Calm and thinking about the future of mental health.

So it's really energizing for us to get back to that zero to one phase, that creative, chaotic, early phase. You know, I know this has been brought up before, but, I like many adults and children, but I think a lot of adults who are sort of Gen X and not just Gen X, but who didn't grow up with smartphones, have found themselves at a certain point in their lives addicted to their smartphones. So phones are, you know, phones are rewiring our brains. There's no question in my mind. There's a dopamine hit. I used to smoke cigarettes. I quit when I was, you know, my late 20s.

horrible, awful, addictive. Honestly, one of the hardest things was quit smoking. It was so hard. And I found myself, you know, later in life thinking, well, is my phone just kind of replace that, right? And yet here we are talking about something that's designed to make us more mindful, more, you know, in our own bodies, but we have to go to the phone to use it, right? And of course, there's no other option.

I mean, it's a super convenient tool. but it's a, I don't know, it's a bit of, it's a contradiction sense, right? It's like, on the one hand, we should probably just throw these things away, but on the other hand, it's not practical, it's not realistic. But it's also these things are having a deleterious impact on our brains. It's a really good, important question. And one of the things Calm does is teach people to be more aware, sharpen their attention, make them more mindful.

And so the idea is that you can use your phone, in a more thoughtful, mindful, productive way, rather than completely dispensing of it or using it 18 hours a day. Yeah, I think the other part of it is, Calm is primarily the content we offer isn't something you consume visually. You know, it's actually mostly audio.

And so interacting with Calm is like, you put on the thing you want and then you're not looking at the phone while you're listening to the content. I mean, we do have more visual content now. We are trying to, you know, make certain elements more accessible. But fundamentally, it's kind of like having just a teacher speaking to you in the room or someone telling you a bedtime story in the room.

And you've got to meet people where they're at. Five billion smartphones. The idea that we can get, you know, we can reach so many people so easily, it is a huge advantage. So, yeah, it is been a contradiction that sort of people have raised over the years. But I think the world of smartphones needs apps like calm. When you guys look back and see where, you know, this has landed and, you know, you both had successes early in your career. But now you've built this thing that has real enduring value. I mean, it's a company valued over, you know, several billion dollars now.

When you think about where you started and where you are now, how much of it do you attribute to luck and timing and how much do you think has to do with just the grind that you put into it? Yeah, that's a tricky one. I think every business needs good timing. And as we've mentioned during our story, there are many kind of serendipitous moments along the way of luck where Alex and I met or how we connected with Tamara or how we met the celebrities. that fueled the sleep stories. So lots of luck along the way, but also a lot of very hard work. Yeah. When you're working on something that you truly believe in

and you think needs to exist in the world, I think it gives you the energy and the grit to persevere in the absence of evidence that it's working or in times of setback and stress. And calm is by far the most important, meaningful thing I've worked on. And aside from any of the sort of financial elements and success

of the business, just having had a positive impact on millions of lives is reward onto itself. And also working with, you know, my best buddy. It's been a lot of fun. So that's Alex Tew and Michael Acton Smith, the co-founders of Calm. Alex, now that we are, we know each other a little bit more. We spent a long time together. You can give us a little beatbox. Come on, give me a beat. All right. All right, here we go.

Let's go. Wow, that's no joke. That is competitive level beatboxing. Well, I've got to say, I haven't done it for years, and I'm very rusty. You just shook that rust off. Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And if you're interested in insights, ideas, and lessons,

from the world's greatest entrepreneurs, sign up for my newsletter at guyraz.com or on Substack. This episode was researched and produced by Catherine Seifer with music composed by Ramtin Erebley. He was edited by Neva Grant. Our engineers were Patrick Murray and Robert Rodriguez. Our production staff also includes Alex Chung, Elaine Coates, Casey Herman, J.C. Howard, John Isabella, I'm Ma'Anne, Chris Messini, Sam Paulson, and Carrie Thompson. I'm Guy Raz, and you've been listening to How I Built This. Thank you.