May 26, 2025 · 1h 17m · how-i-built-this
Calm: Alex Tew and Michael Acton Smith
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of How I Built This, host Guy Raz interviews British entrepreneurs Alex Tew and Michael Acton Smith about how they transformed their past startup failures and burnout into Calm, a multi-billion-dollar meditation, sleep, and digital wellness platform.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Guy holds 36.6% of the talking time here. How this is scored →
Guy as informed peer 5.0 Guest teaching 2.1 Guest disagreement 0.4 Guy pushing back 1.1
speaking balance: gold is Guy, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 1:13:27 Alex Tew counters the smartphone contradiction criticism
Alex Tew directly addresses and pushes back against Guy Raz's smartphone paradox critique by highlighting that Calm is an audio-first tool designed to reduce screen time.
Hardest push from Guy ▶ 1:11:47 Guy Raz challenges the smartphone medium paradoxGuy Raz draws an extended analogy between smartphones and cigarette addiction, refusing the simplified narrative of mobile wellness apps to highlight the underlying digital paradox.
Biggest teaching moment ▶ 1:06:28 Michael Acton Smith articulates the ICE talent frameworkMichael educates the host on the proprietary ICE strategy (Invest, Content, Engagement), explaining how cap-table participation transforms superficial endorsements into authentic engagement.
Guy holds their own ▶ 1:11:47 Guy Raz articulates the neurological toll of digital addictionGuy Raz demonstrates strong subject synthesis, grounding his critique in dopamine loops, neurological rewiring, and personal behavioral parallels to challenge the founders' medium.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Guy as informed peer | Guest teaching | Guest disagreement | Guy pushing back | Why |
|---|---|---|---|---|---|---|
| Michael's Early E-Commerce Venture: From Hotbox to Firebox | 5 | 1 | 0 | 0 | Guy Raz establishes conversational familiarity with 1990s UK e-commerce and retail concepts like The Gadget Shop and Sharper Image. Michael shares the early origin story of Hotbox and the Shot Glass Chess Set in a collaborative, friendly tone. | |
| Alex Tew: Beatboxing and The Million Dollar Homepage | 5 | 1 | 0 | 0 | Guy prompts Alex Tew on his background in beatboxing and how The Million Dollar Homepage leveraged viral early-internet media dynamics. Alex candidly describes the simple mechanics and media feedback loop that fueled the viral success. | |
| Mind Candy, Perplex City, and the Moshi Monsters Boom | 5 | 2 | 0 | 1 | Guy explores Mind Candy's trajectory, asking pointed questions about why Perplex City failed commercially and why Moshi Monsters lost momentum. Michael explains the mechanics of child engagement churn and reflects on turning down acquisition interest from Disney. | |
| Mid-Roll Break and Transition to Calm | 4 | 2 | 0 | 0 | Guy charts the transition into Calm, probing the domain purchase of Calm.com and the initial web experiment Do Nothing for Two Minutes. Alex explains the product rationale of making relaxation accessible to average users. | |
| Michael's Austrian Epiphany and Move to Silicon Valley | 6 | 2 | 1 | 2 | Guy references Dan Harris's book 10% Happier and questions whether Headspace's first-mover advantage posed an existential threat. Michael and Alex push back against winner-take-all assumptions, arguing that mental wellness was an expansive market. | |
| Tamara Levitt, The Daily Calm, and Sand Hill Road Rejections | 5 | 3 | 1 | 3 | Guy presses on why Silicon Valley VCs rejected Calm in 2016 despite multimillion-dollar revenue traction. Michael explains that investors dismissed Calm as an easily replicable content play without recognizing brand equity. | |
| The Invention of Sleep Stories and User Acquisition Breakthrough | 5 | 2 | 0 | 0 | Guy tracks the introduction of Sleep Stories and the breakthrough in paid user acquisition on Facebook. The guests elaborate on how data analytics exposed nighttime usage patterns and how unconventional video ads enabled massive scaling. | |
| Celebrity Collaborations and the ICE Framework | 4 | 4 | 0 | 0 | Michael educates the host on Calm's ICE framework (Invest, Content, Engagement) for celebrity collaborations like Matthew McConaughey, LeBron James, and Harry Styles, explaining how equity participation aligned incentives. | |
| Series A Funding, Healthcare Pivot, and Executive Transition | 6 | 2 | 0 | 1 | Guy highlights how winning Apple's App of the Year strengthened Calm's leverage during Series A negotiations and inquires about the pivot into healthcare through the Ripple acquisition. Michael details the governance transition to co-Executive Chairmen. | |
| Addressing the Smartphone Paradox | 7 | 3 | 2 | 5 | Guy mounts an articulate pushback regarding the paradox of delivering mindfulness via an addictive smartphone medium, comparing phones to cigarette addiction. Alex and Michael counter by emphasizing Calm's audio-first nature and meeting users where they are. | |
| Reflections on Success, Luck, and Beatbox Performance | 3 | 1 | 0 | 0 | The episode concludes with reflective remarks on grit versus timing, followed by Guy playfully convincing Alex to deliver an on-air beatboxing demonstration. |
Statements from this episode (18)
Tew: Early Million Dollar Homepage advertisers got massive returns
“People were getting something in, 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.”
Tew: Press attention drove the Million Dollar Homepage's viral loop
“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. Yeah. And I'm sitting on the couch and they're like, you know, why i…”
Mind Candy buried a $200,000 treasure for game Perplex City
“So that's what Perplex City was, and to cut a very, very long story short, we buried a treasure worth 200,000 dollars somewhere in the world, and then we set about releasing clues across all sorts of different media.”
Acton Smith: Not selling Mind Candy to Disney was probably a mistake
“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.”
Michael Acton Smith: Mind Candy unraveled despite widespread public accolades
“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 four a.m. That this was unraveling and this was falling apart.”
Tew: 'Do Nothing for Two Minutes' gained 2M visitors in a week
“We just, we built it one afternoon and tweeted about it, and it just went viral. And within a week, had about two million visitors.”
Tew: Only 50% of users could do nothing for two minutes
“And funnily enough, only about 50% of people who went on the page could actually do nothing, like not touch their mouse or keyboard.”
Acton Smith bought Calm.com for $140,000 using his house deposit
“I think 140,000 dollars, about, he sold it for. About that, yeah. I would, I earmarked that money for a deposit for a house”
Tew: Calm raised over $400k from 12 angels after 100+ meetings
“I think in, in the end we raised from about 12, 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. Lik…”
Tew: 10% of early Calm mobile app downloaders paid the $5 fee
“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 downloade…”
Acton Smith: Silicon Valley offered scaling talent and openness lacking in London
“Silicon Valley was the place to build this business. You know, the, 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 an…”
Acton Smith: Calm's target market is anyone with a mind
“The market we did feel was absolutely enormous. It wasn't just the people who are meditating. It was, you 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.”
Acton Smith: Calm pitched Sand Hill Road VCs and struck out
“Yeah, we went up and down Sand Hill Road and struck out.”
Calm hit its first $1 million month in January 2017
“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.”
Acton Smith: Calm's revenue surged from $7M to $21M to $80M
“So our revenue went from, you know, seven million to twenty one million to eighty million.”
Tew: Calm raised prices from $10 to $60, boosting net revenue
“So, you know, the very first subscription we had was 10 dollars 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 h…”
Acton Smith: Calm put all key celebrity partners on its cap table
“So all the key talent we brought on board are on our cap table.”
Tew: Early capital constraints forced Calm to innovate sleep stories
“I think if we had raised tons of money very, very early, we may have not had the scrappiness to, say, do sleep stories. You know, we may have just kind of been drunk on, you know, expensive, unprofitable user acquisition. So I think we kind of got the foundati…”