The Hustle - ❤️‍🩹 A $26B call for help

Happy Trends Tuesday!

Ah, welcome to mid-November, where a few things are true: 

• Mariah Carey is rapidly defrosting
• The US Election results have come out
• EoY planning is in full force
• The battle of holiday shopping is upon us
• Concentrated family time is near

...some of which aren't great for our mental health. 

So let this be a reminder to take some time for yourself.

Breathe. Cuz we all need it. 👊

In today's email…

• Can AI help the youth get better mental health care? 
• Growing a multi-million brand with the CEO of Calm
• What we’re surfin’, from AI-enhanced Tom Hanks to a very relatable crypto meme

Let's dive in! 

🧑‍💻 50 EXCEL SHORTCUTS

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🚀 WHERE TO BUILD NEXT

AI, meet youth mental health

There seems to be increasing attention on how AI can improve the mental health of entire generations.

Source: Google Trends, six-month rolling average

Casio launched an AI pet for mental health, Moflin, in Japan. 

Manifest, an AI affirmations app, raised $3.4m last month. The founder, Amy Wu, cited the “loneliness pandemic” among Gen Z. 

Like Manifest, many of the global ventures tackling mental health with AI today have a youth focus — Gen Z’s mental health needs are hugely underserved, especially among those who are still minors.

This spells trouble for them, and opportunity for those who are willing to step up:

🏃 70% of Gen Zers say their mental health requires more attention than their physical health.

😞 They’re the least likely generational group to report positive overall mental health.

⬆️ 46% of psychologists reported higher rates of teens seeking therapy since the beginning of the pandemic.

Investors are already betting on the youth digital mental health space, which is projected to reach $26B by 2027. 

Source: Rock Health

The root of the problem? A lack of practitioners. 

We see two ways entrepreneurs could help: 

1. Nurturing future practitioners

With only ~10.5k practicing child and adolescent psychiatrists in the US, the ratio of youths to practitioners is a staggering 1.4k to one.

Youth therapy is also particularly demanding on practitioners, as they deal with both the patient and their caregivers.

But with the educational consulting market thriving, business builders could provide counseling to help aspiring practitioners map out their academic and career paths. (A “remove the headache of entering the profession” package, if you will.)

Offer a bundle service to help them: 

• Prepare applications to selective academic programs
• Find placements in youth community clinic jobs or internships
• Access research on market demand, salary, and industry trends 

2. AI therapists to the rescue

Real therapists can’t be replaced… yet — but AI is getting pretty damn close, and it’s another way to bridge the gap. 

Enter: AI-powered emotional support companions (with endless patience) that could help youths cope with anxiety, isolation, and other mental health issues.

Having an AI support buddy is neat, but building one is tricky. How do you prove its efficacy? What about ensuring it’s trained to be empathetic and understands social and cultural contexts?

Take this example of an eating disorder chatbot that was swiftly suspended after it provided harmful advice. As more bots enter the therapy realm, avoiding such disasters will be crucial, as will proving to users (and parents) that they’re a safe option.  

This leaves entrepreneurs with opportunities to address the barriers of implementing an AI solution, without actually building one. For example:

✅ Provide AI businesses with rigorous testing procedures, highly trained mental health professionals, or 24/7 human tracking and response teams to detect issues before they arise.

🎙️ Focus on the education piece and become a thought leader, informing parents of new developments via a newsletter or a podcast. 

✍️ Build a marketing agency that helps AI companies craft thoughtful messages

By the way, if you enjoy the AI story and want more, HubSpot just acquired MindStream, an industry-leading AI newsletter. Go check it out! 

⚙️ OPERATOR WISDOM

How Calm's CEO created a multimillion-dollar brand

Since its inception in 2012, Calm, a meditation and mindfulness app, has blown up. It’s got:

• 4.5m+ paid subscribers
• 100m+ downloads
• Valued at $2B+ in its latest funding round

But how did it get there?

Michael Acton Smith, the founder and CEO of Calm, shared some gems of wisdom with the Trends team.

1. Turning your headache into new business

Calm wasn‘t Michael’s first rodeo. 

His foray into entrepreneurship started with a toy and gadget company in the late 1990s, called HotBox. He and colleagues “saw this thing called the internet bubbling up, and thought there was gonna be an opportunity to revolutionize commerce.”

HotBox sold “quirky gadgets, toys, and games” online — and that came with a host of challenges. Predating ecommerce staples like Shopify and Stripe, Michael and his employees had to “hack everything together.”

He also hit a hitch over the company name.

Unfortunately, Hotbox.com was one of the world‘s largest porn sites at the time, prompting him to change the name to Firebox. He didn’t like how his mom would tell her friends to check out his company's website and have them land … elsewhere. 😬

You’ll find the lore on Firebox’s About page. Source: Firebox

Over two decades later, Firebox is still operational. At its peak, the company was at $70m in revenue — but as he learned, the world of kids' entertainment moves fast.

“You can literally be super hot one minute and not the next … It's a hits-driven business. We had to let a lot of people go; we had to restructure the business, and revenues dropped dramatically. That was a period where I was super stressed and wasn't sleeping well. And I had constant headaches,” Michael said.

Troubling as that stretch was for him, it was ultimately productive — that's when “the light bulb went on around Calm and meditation.”

2. Overcoming the fundraising challenge

In 2012, Michael teamed up with Alex Tew to launch Calm, shifting from a hits-driven business to one centered on "a fundamental human need to reduce stress, be calmer, and understand our own minds."

But raising cash? Brutal. Investors didn't get it. 

"People didn't really understand what meditation and mindfulness were. It comes with so much baggage. From people thinking it's religious, or woo woo, or a bit weird," Michael said.

So they bootstrapped. But as meditation started hitting the mainstream, demand caught up. Michael compares it to Nike's early days: "Physical fitness wasn't really a thing [back then]. Going running was weird."

Meditation had a similar trajectory. 

“What I think the best entrepreneurs do is they spot these inflection points in society where public opinion shifts. And when it shifts, it often doesn't happen gradually. It happens really quickly. 

It took years and years before Calm hit a tipping point. But it did.

Source: Michael Acton Smith

3. Getting creative

Calm didn‘t owe much of its initial success to paid marketing. It didn’t need to — the company reached 8m downloads almost strictly on word of mouth.

"When people discover mediation, they become very evangelical about it, which fueled our growth.”

But they also pulled some slick moves, like launching donothingfortwominutes.com, a website that was basically just some waves lapping on the beach.

“You literally had to just stare at these waves for two minutes and not move your mouse or tap on the keyboard, and not many people could do it. It was surprisingly challenging, but if you got to the end of it, it would ask for your email address,” Michael explained. 

Guess what? They collected ~100k email addresses in two weeks.

Not a bad stunt. Source: Wayback Machine

4. Cultivating a distinct brand identity

In any game, standing out is key. 

While there weren't tons of meditation apps back then, Calm did have competition—like Headspace, which pushed big branding campaigns to shake off the "lotus leaves and hippies" vibe.

"We took a slightly different approach [than Headspace]. I love this idea that Calm is based more around nature and the natural world. I think that gives us a bit more accessibility," Michael said.

Plus, the name "Calm" has legs — it can work on a chain of hotels, or clothing, or a variety of other products and services, according to Michael.

5. Staying nimble

Another way Calm set itself apart was by staying lean.

"Alex and I have run many businesses before. And I think we have startup DNA — the whole idea of being incredibly efficient with capital," Michael said.

They built a nimble, test-driven culture where everyone wore multiple hats.

"I made some mistakes in the previous businesses where I hired too many people, got too bloated," he admitted. "It's almost like a badge of honor a lot of entrepreneurs talk about, how many people in your business. And to me, now, it's a badge of honor how few people we've got."

He swears by hiring a small number of "10x level" people. "Oh my God, it's insane what you can do," he said.

Keep reading to see other growth lessons from Michael, like leveraging fundraising for brand awareness. 

🗂️ OPEN TABS

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