The business of calm

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Last week was a long one. The stress of the election coupled with the pandemic has a lot of us looking for ways to relieve anxiety and invest in wellness from the comfort of home. Increasingly, many are resorting to mental health and meditation apps. Calm, a meditation app, topped Apple's health and fitness category on Election Day — and other mindfulness apps like Headspace weren't far behind. 

Why are these apps popular?

The anxiety-inducing times, along with poor access to mental healthcare and high smart phone penetration are big contributing factors. However, these are not the only ones. For me, the biggest factor is that the companies making these apps have finally figured out that they are content creators and not just app makers. The features that were available through these apps 5 years ago were a lot more rudimentary compared to what we have today, and so was the content. These apps have heavily invested in improving their content. It's telling that the biggest and most popular feature of Calm is the celebrity led meditations. You get Scotty Pipen talking you through his basketball journey, Lucy Liu reading you a story and Matthew Mcconaughey putting you to sleep.

How do these apps make money?


Most have three income pillars:
  1. A subscription fee that consumers pay to unlock the meditation content: A Calm subscription, for example, costs $16.99 a year. The app has been downloaded 80M times.
  2. B2B programs: This is an enterprise offering to teach mindfulness to employees.
  3. Wellness programs: Some apps, like Headspace, also have an FDA-approved wellness program that consumers enroll in and insurance companies will start including in wellness offerings. 
The pandemic has certainly boosted the business of these apps and accelerated their adoption - many of us are finding a sigh of relief or a point of peace in these apps.  The industry is expected to be worth over $2B in the next two years and the valuation of these apps will go up by orders of magnitude - but so will their costs. Content is King, and I expect many of these apps to have large funding rounds. Now if you'll excuse me, I'm off to be lulled to sleep by a certain Oscar winner and his infamous Southern drawl. 

Disclaimer: This post is merely my own assessment and is not an investment recommendation. For professional advice, seek input from a licensed investment advisor.



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