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. ----- This episode is brought to you by Tegus. We created Business Breakdowns to uncover the lessons and frameworks behind every business, and that's what makes Tegus our perfect launch partner. Much of the foundational prep for these episodes start with research on the Tegus platform.    With Tegus, you can learn everything you’d want to know about a company in an on-demand digital platform. Investors share their expert calls, allowing others to instantly access more than 15,000 calls on Coinbase, Hinge Health, Farfetch, or almost any company of interest. All you have to do is log in. If you're ready to go deeper on any company and you appreciate the value of primary research, head to tegus.co/breakdowns for a free trial.   ----- Business Breakdowns is a property of Colossus, Inc. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.   Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.   Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss   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