With $70m in revenue, Michael Acton Smith’s company imploded.
The company, Moshi Monsters, had been a breakout success. Over 80 million kids flocked to the site to play with the “Tamagotchi-like monsters” earning in-game funds to spend on customizations.
“We thought we were gonna build the next Disney,”
Michael recalls the experience in a recent Trends interview with The Hustle founder Sam Parr.
“And then almost overnight, it just imploded.”
Kids entertainment moves fast. You can be the hottest ticket around one minute, and cold as a cafeteria Salisbury steak the next. Michael and his team experienced this dramatic swing first hand.
The collapse was stressful, and it was that stress that inspired Michael’s next breakout (and sustainable) venture:
Calm: The Nike for your Noodle
Michael and his partner Alex Tew founded Calm in 2012. The vision was to provide meditation and mental wellness content as a subscription service. The site was less than perfect at launch — just a woman’s voice reading relaxing stories.
Today, the sleeping section alone has generated over 140 million listens.
Michael thinks of Calm like Nike. 50 years ago, running and personal fitness was not top of mind for the general consumer. The same is true with mental wellness and meditation.
“What I think the best entrepreneurs do is they spot these inflection points in a society where public opinion shifts.”
“And when it shifts, it often doesn’t happen gradually. It happens really quickly. And if you’re surfing that wave when that shift is happening…”
In Calm.com’s case, that shift occurred around 2016. After slogging for the first few years, Calm’s revenue quickly rose from $7m in 2016 to $80m by 2018.
Michael attributes this success to changing consumer behavior (mindfulness and meditation are now en vogue), as well as his team — it’s extremely efficient.
Calm hit $80m in revenue with only 40 employees. Compare that to their competitor Headspace with 250 employees.
That efficiency also contributed to the company’s early growth. Michael’s team gained 8m downloads without spending a cent on paid marketing.
The first 5,000 users
Michael shared a short anecdote of how he and Alex gained the first 5,000 users.
After completing the 2 minutes, users were prompted to enter their email. In 2 weeks, it had captured over 100k email addresses.
Want to learn more growth tactics Michael and his team used to grow Calm?
See Michael, and 29 other successful founders, speak at this year’s Hustle Con, December 2-3rd in Oakland, CA.
Pre Sale tickets are on sale now — save $125 when you buy before the August 23rd deadline.