Michael Acton Smith is best known as the co-founder and co-CEO of wellness app Calm, which has been downloaded more than 50 million times. The app hails itself as the No. 1 app for sleep--and has been on a rocket-ride of growth since being named Apple's app of the year in 2017. It ranked No. 19 on the 2018 Inc. 5000 and was valued by investors early this year at more than $1 billion.
But Acton Smith, speaking at the 2019 Inc. 5000 Conference & Gala in Phoenix on Saturday, said his journey to creating Calm hasn't been all stars and jet fuel. It began humbly, after he'd graduated from the University in Birmingham, England. He and a friend grew bored of their "sensible jobs" and picked up a heavy tome called Doing Business on the Internet.
However unimaginatively titled, that book provided inspiration. The friends dipped a toe into business by selling toys and gadgets online. The ordering process worked at barely the speed of dial-up; it involved faxing in one's credit-card number. "It was not the slickest operation in the world," said Acton Smith. But an original product schemed up after a night of drinking--a chess set composed of shot glasses--proved a sales hit, due in part to the pair's comical telling of its origin story.
Acton Smith said his team learned an important lesson about the power of telling the tale behind a product. "We had no money for marketing, but we told a good story--and journalists loved it," he said.
After that company almost flamed out during the dot-com bust of 2000, Acton Smith branched out to focus on gaming. He created a real-world scavenger hunt in which he placed clues in newspaper classified ads, and in the mouths of hired actors placed on the street. A buried treasure, buried in a forest north of London, was actually unearthed by the winners a few years later. It was the most creative business he'd ever been involved with--and the most financially disastrous. "It was completely bonkers," Acton Smith said.
Turning back to the internet, though, worked. Another game, a sort of online Tomagotchi called Moshi Monsters, caught on with 80 million kids around the world. Soon it was valued at $200 million. "We thought we would be the next Disney." Then as the company grew internally, almost overnight the user-growth stopped, Acton Smith said: "It was a really humbling, painful lesson about the entertainment industry."
At that point, having created three ventures, Acton Smith was burned out--and stressed. He recalls years in which his sleep and mental health suffered. A friend of his turned him on to meditation. Acton Smith was a skeptic. "Ten minutes of meditation?" he thought. "I could get another six emails out! I saw it as a little woo-woo."
So did his friends. But after several attempts, paired with a little research into the practice, he was hooked. "I realized it wasn't woo-woo--it was neuroscience." He launched a company called Calm with Alex Tew in 2012, and then relocated it to California, where he hoped people were a little more open to the idea of meditation via app than they were in the U.K.
Indeed they were. A competitor, Headspace, which had launched in the U.K. in 2010, had already attracted Silicon Valley's attention. By the time Acton Smith and Tew sought venture-capital funding, Headspace had raised more than $70 million. Calm had assembled a mere $1.5 million by 2017. Acton Smith doesn't downplay the challenge in growing while underfunded, and admits he laid off staffers five times. Still, he says, Calm "always saw ourselves as the Facebook to their Myspace."
He began pitching investors on Calm as not just a meditation app, but also as one that would eventually help individuals with "all aspects of your mental fitness." He also raised prices for the app's premium content--and had revenue growth to show off to potential investors. "Revenue solves a lot of problems," Acton Smith said. In early 2019, a major investment round culminated in a $1 billion valuation.
As the company embarks on a new period of venture-fueled growth, Acton Smith is keeping in mind the lessons he learned before founding Calm. "Look after yourself. As entrepreneurs, we obsess over looking over our teams, we spend so much money and time looking at our metrics," he said. "But what's the most important part of business? It's ourselves. If that piece of the puzzle is not happy and healthy, the whole thing starts to crumble."