Welcome back to my weekly newsletter. This is going to be a series of articles covering how we came up with the idea of Calm Sleep, scaled to over a million users in less than a year, and all that with less than $1,000 worth of total investment. 🌱
I’m Akshay Pruthi, an entrepreneur who loves to build products from the ground up. Over the past 6 years, I’ve built multiple products from scratch and scaled them to millions of users. This is my attempt to share our most important lessons from building one of those apps - Calm Sleep. 🤗
Every week I will publish an article about a different challenge we faced while building Calm Sleep.
Last week, I discussed Psychological pricing & hacks to improve your revenue.
What’s in this week’s read
This week, I am going to share:
How we coped with the inevitable element of any start-up: Its highs and lows.
Our framework to think 10X.
How a simple technique of pressing a reset button helped us.
A cheat sheet for the metrics to track.
Entrepreneurship is a hard, lonely journey. Every moment stands synonymous with reliving the cheers and working through your fears while constantly striving to move onwards and upwards.
Keeping my spirits high & my hopes from the app higher, let’s take a glimpse of what’s currently happening at Calm Sleep.
Our New User Acquisition has dropped to ~300/day
2. Our revenues are on a downward spiral.
I was thinking the other day, did I foresee this dip the moment we monetize our app with the existing user base? The answer that came to me was - YES!
In all honesty, I can say that, for obvious reasons, I was prepared to see the payments spiking & then slowly falling. But I definitely hadn’t anticipated that our user acquisition would drop to ~300/day.
It’s difficult to see a downward curve in your numbers especially when you have seen a rise, continuously & consistently.
But does that mean it's not working? Not necessarily.
Essentially, what we are trying to ask ourselves is
What’s the value metric of the product?
How do we emerge from here?
Let’s get to it! 😎
What’s the value metric of the product?
Think of any type of trade...how does it happen?
A trade occurs either when a buyer accepts the asking price or a seller takes the bid price. Both buyers and sellers are putting a bet on some product, service, or whatever. They are putting a bet because they believe the product they are buying/selling has X value. And the unit of measuring that value is the price.
For instance, I am a seller selling pens at INR 10. If there is a buyer who buys it for Rs. 10, 10 becomes the accepted value in the market for the PEN.
As a seller, if you increase your value, you have the leverage to increase your price too, having a net impact on the perception of your brand.
Take the same example, if you are selling a PEN with an ink attached, the value increases and you could try selling it at Rs. 15. If buyers purchase at Rs. 15, it becomes the market accepted price.
Looking at the data, I assessed that nearly 25,000 users come to the app, almost 4 times a week, to play some sleep music. This is an indicator that they love this app. Out of those, 4000 opted in for payments. When we asked these users, ‘why did they pay?’, their common responses were:
“I liked the voice of the artist <name>. It helps me sleep.”
“The sounds help me feel calm.”
“The stories make me forget my worries & take me to a whole new world."
It’s evident that our users are paying for the content and the narrator’s soulful voice that helps them sleep better. But the real question is how do we measure this? How do we put a KPI on content? Thinking hard brought me to the first juncture of this week’s read - what’s our value metric?
The value of the app increases if we are able to improve the sleep experience. For instance, if Akshay goes to bed at 10 PM but actually sleeps from 2 AM to 7 AM, that’s not healthy. This means Akshay’s Sleep Efficiency is poor. But if the app is able to decrease the time of going to bed vs actually sleeping, the sleep efficiency will increase.
Here you go, Sleep Efficiency seems like the value metric for us which we should aim to improve.
What’s Sleep Efficiency?
Time spent in sleep / Time spent in bed * 100
If sleep efficiency per user increases, the value of the product also increases.
Okay so, problem 1 - decode product metric value; done & dusted.
Now the next hurdle is figuring out ‘how do we track this?” How do we calculate what time the user is going to bed? When does the user actually sleep? And when does the user wake up? I will discuss this in the upcoming blogs :)
But for now, rejoicing because we have a KPI attached to the value of our product.
This also brings to my attention why attaching a KPI or a north star metric to your product is crucial. Here’s an article by Lenny, my favourite - A must-read! 🤗
My 2 cents on it: It’s a relief and somewhat like oxygen to the business. It gives a new purpose to your business, a new direction that is sometimes crucial in the early stage.
While we had a north star to optimize on, I was still not very convinced on how we will win this market?
I had to clear my thoughts, get to the drawing board and rethink. You know how you reset that WiFi and suddenly things start to work perfectly fine. Sometimes, it becomes important to do that to make things work again.
Moral - Press a reset button, look at the same things from a different lens!
This reset strategy has always worked for me especially when I am confused or stuck. And when I say reset I mean go back to the base, get into the research mode and delve deeper to understand the problem.
When I was analyzing everything objectively, one question frequently lingered in my mind - where am I placing my bigger bets? 🤯
Sure, the small iterative wins are important and necessary. But what am I doing to ensure I am on the winning side of the table?
What am I doing to ensure I am on the winning side of the table?
I started reading more. From research papers to competitors' blogs and books on Sleep, I absorbed it all like a bibliophile. I particularly enjoyed The Sleep Solution: The Sleep Solution: Why Your Sleep is Broken and how to Fix it by W. Chris Winter MD. Did you know the key to improve your sleep is to work on your sleep hygiene? 😯
I started writing more. I created notes, my research document is 12 pages long now 😬
I threw broader problems at my team members and asked them to come up with their ideas. For eg, How can you solve the problem of serving the right content to the users? How can you personalize the sleep experience of each individual on the app? What role can technology play in reducing our ‘new content’ cost? How can we move 10X faster? And many more.
After doing all this, I felt liberated! I realized I have just started, there’s a lot to do, a lot to solve, and a lot more to learn. The imagination of the impact one can create by solving this problem makes me jump out of my chair.
The questions that are still living in my head rent-free are:
How do I grow from 1M to 10M? What will it take?
What’s worked for me in the past? What didn’t and why?
What needs to be changed moving forward?
Why will people use my app over the others and for how long?
Is my team growing? Am I growing?
How can we make it more joyful as a journey? What can I learn from others?
As promised, here’s the cheat sheet for the consumer metrics one should track.
In the next article, I will discuss in detail what happened with the playlist feature. Hint - We got the results!
I will discuss more on the key experiments we are running to address the above problems :)
If you enjoy reading my articles, Buy me a coffee here