Headspace

Digital Relaxation Ecosystem

Andrew Kuzemczak
May 06, 2025

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Welcome to the 1 new subscriber who has joined Future Human since our last edition! Join 171 other leaders learning about the future of human health by subscribing here:

Hi friend,

Welcome back to Future Human! Sorry this edition is being released later than normal. I was not happy with how it flowed yesterday, so I scheduled time to edit before 4PM release, but med school made other plans for me. Well, now you can enjoy these 2,910 words with your morning coffee tomorrow!

I hope you appreciated last week’s dive into the brain with NeuroBionics. I am still amazed by the possibility of funneling microscopic electrodes through the vasculature to modify one’s neurology and bring about improved mood and behavior. Here in medical school, we are far from our Brain & Behavior course in the fall, but newsletter #11 certainly made me look forward to the material we will be learning (let’s see if I still feel that way in the depths of September).

Okay, now onto edition #12.

Last week, we explored our youngest startup yet. To contrast that, this week we will look at the oldest one (arguably not a startup, but the definition remains up for debate). Some say startup is defined by age (<5 years), team size (<100 employees), revenue (<$50 million), or valuation (<$500 million). I say if the healthtech company is exciting and constantly innovating, I will consider it for a deep dive. This week may not fit the startup image perfectly, but an occasional wander never hurt anybody.

So with that, let me ask you:

If you lack immediate access to nature, therapy, or any of the many tools you use to relax, would you look to your computer and digital health rituals as the next best thing? If it did relax you, could it ever become the first tool you reach for?

The Story

In the range of startup founder stories, few would argue that a monk and a marketer are the classic co-founder duo. That would be until 27-year-old Richard Pierson and 36-year-old Andy Puddicombe were introduced to each other in 2008 with a similar issue.

Richard was a London-based marketer for Axe deodorant who was experiencing burn out in his career and switched to freelance work to change up his routine. This move, however, would bring about crippling anxiety as he tried to get his work off the ground. In 2008, he was introduced to Andy Puddicombe, a buddhist monk of 10 years who dropped out of college in 1994 to find peace after losing multiple close friends and a stepsister in different sudden accidents.¹

The two exchanged marketing and mindfulness tips, and quickly realized that together they could spread Andy’s work using Richard’s business acumen. Two years later, they would found a company that put on meditation events in London. Andy’s profile as a meditation guru grew in London, and with it came multiple books. In 2012, the pair pooled $50,000 from friends and family to launch the first version of Headspace, a digital set of 365 meditation sessions. The popularity exploded with the new app, and soon enough it is 2015 and they are raising their Series A for $30 million. The investor and fan collective reads like the invite list to Michael Rubin’s White Party: Jessica Alba, Jared Leto, Ryan Seacrest, Gwyneth Paltrow, Richard Branson, and Lebron James. For the business/finance types, they also had Breyer Capital and LinkedIn chief executive Jeff Weiner.²

After 3 more years, in 2018, they really push into our area of interest, with a new subsidiary titled Headspace Health. This team was tasked with creating FDA-approved mindfulness tools to move into mental health, and beyond just meditation.

And now you all know them as the Headspace of today. They have launched partnerships with Spotify, Snapchat, Hinge, and Netflix, and acquired a half dozen other tangentially related platforms. They are essentially ubiquitous in the mindfulness space. They are THE 21st century relaxation platform.

The Tech

Unlike the tech of Paige or Isomorphic Labs, the software here is not particularly challenging to grasp, so I will not spend too much time breaking it down. Instead, I will focus on the features offered by Headspace, since they are rapidly expanding through acquisition and internal innovation.

Recall, the platform was launched in 2010 as the first meditation offering in the app store. It was nothing more than a series of guided meditations from Andy. They have since exploded to cover most of wellness, from stress relief and anxiety management to focus and physical exercises.³

In 2018, Headspace made its first push into sleep. To address insomnia and poor sleep, Headspace introduced “sleepcasts”, which are 45 minute bedtime stories with relaxing narratives. This is offered alongside sleep music, nature soundscapes, and sleep exercises. Soon after, they naturally added in movement and exercise. The Move Mode provides short video and audio clips that guide you through stretches, yoga, and light workouts.

The inevitable next technological step came in 2021 with the acquisition of Ginger, a digital mental health company. Through the merger, Headspace Health launched Headspace Care, offering on-demand behavioral health coaching and tele-therapy in addition to their self-guided meditations. Consider this journey, someone downloads the platform to tackle their anxiety and after some weeks of meditation decide they want more personalized care. Through Headspace Care, they can now message a coach for one-on-one support. The help they get is informed by evidence-based Cognitive Behavioral Therapy (CBT) and Acceptance and Commitment Therapy (ACT). Critically, the content creation process is guided by an in-house team of clinical psychologists. If needed, users can even now be referred to a licensed therapist or psychiatrist through the same platform. One-stop-shop for all of your mindfulness needs.

Headspace DTC Mindfulness Services

Lastly, in the least surprising addition, Headspace has integrated AI to improve the user experience. Content recommendations are now run entirely by an algorithm that studies your preferences, usage time, and mood inputs to perfect what it offers you. Aside from content, the AI has been for a while analyzing user word choice in communication with coaches to predict crises. Seemed a bit creepy at first, but upon further review, it is a wildly effective way to get individuals the help they need much sooner than when a meeting is needed for decisions to be made. Think of this as AI-driven triage. Many hospital emergency departments could use this to be fair. Most excitingly, in 2024 Headspace released Ebb, their interactive and empathetic chatbot. Built into the app, Ebb is a conversational AI mental health companion trained in motivational interviewing. If a human is ever not immediately available, users have an infinitely prepared resource to turn to. With over 100 million users, it is no surprise Headspace needed a more scalable support system.⁴

So there you have the tech. Multiple layers of one beautifully grown mindfulness onion: meditation, sleep, exercise, therapy. It is not technologically complex, but mental health is no easy topic to tackle, so all-in-all complex in its own way.

The Market

The digital mindfulness space is by no means old or massive, but within that, Headspace reigns supreme. It is a first mover and its success reflects that. As I mentioned above, they have over 100 million users and began with a DTC model for those interested in mindfulness. To further show the competition how it is done, Headspace made the biggest push into the B2B segment with its 2021 acquisition of Ginger. The combined entity now reportedly can reach 100 million lives across 190 countries via 2,700+ enterprise and health plan partners. Whether you work at Starbucks, Adobe, or GE, you have access to Headspace.⁵

Deals like this are not just about finding more of the same user, it is about expansion into a new population. Corporate partnerships have given Headspace access to those who would not normally seek out and pay for the mindfulness services. Busy professionals or younger individuals may pay less attention to their sleep hygiene, but through key partnerships, Headspace aims to get in front of this population often. Initiatives like the Snapchat integration in 2020 and free access programs for US healthcare workers all introduce mindfulness to these critical groups who may not seek it out themselves.

As for competitors, Calm stands out as the main rival. Founded in 2012, Calm is has been putting up an admirable fight for the first place position in the digital mindfulness space. They similarly secured over 100 million app users. Calm boasts 4 million paid users to Headspace’s 2 million. There are a variety of theories for their rapid growth, but here is what I think (since you signed up for that). First, they positioned themselves as not just a meditation app, but a general wellness platform early on in their journey. From there, they aggressively targeted the sleep market, which is less competitive than meditation. Next, as silly as it seems, they invested heavily in celebrity partnerships and brand storytelling. It may sound crazy, but nothing sells like Matthew McConaughey’s voice soothing you to sleep.⁶

Together, Headspace and Calm account for 90% of the active users of mental wellness apps. It is about as much a duopoly as you can find out there. It is not uncommon for people to even use both apps at different times of day because they both fight so fiercely for users. In 2020-2021, they even ‘fought’ for the highest valuation during simultaneous funding rounds, with Headspace winning at a $3 billion value to Calm’s $2 billion.⁷

Outside of Calm, few options stand as perfect competitors. Many of you have probably heard of BetterHelp, which in my opinion is the next best rival. Founded in 2013, BetterHelp is a leader in online therapy. The group, however, was acquired in 2015 by Teladoc Health, so it is less a startup and more a subsidiary. BetterHelp provides a network of licensed therapists reachable via a mobile app or website. Since 2013, they have signed up over 2 million users and have 374k active users in the United States. Again, it is not a perfect competitor as online therapy is not Headspace’s specialty. Headspace is quickly becoming the mindfulness super app, but therapy is not their one and only focus.⁸

The mindfulness market of competitors does naturally grow when you consider startups that have not attempted to cover every aspect of mental wellness like Headspace and Calm have. There is Insight Timer for meditations, Sanvello for therapy tools, and Talkspace for subscription psychiatry support. Heck, even Apple has released a Mindfulness app on their Apple Watch. Although it has since returned from the stratusphere, digital mental health usage continues to benefit from increased usage after the COVID-19 pandemic. What was used by only 12% of U.S. adults in early 2020 quickly spiked to 20% by 2021. The market size and broad usage remains just under those pandemic highs, so plenty for every competitor to grab.⁹

The Sick

After last week’s edition on neuro-stimulation, it is not news to anyone that mental health is something countless individuals suffer with, and many do in silence. The World Health Organization estimates that 1 billion people globally live with a mental disorder (think anxiety, depression, or substance use disorder). In the U.S., 1 in 5 adults experience some form of mental illness each year. Anxiety remains the most prevalent, affecting 19% of adults. Outside of personal conditions, professional circumstances leading to burnout are on the rise. In 2019, the WHO even recognized burnout as an “occupational phenomenon”, a major step to its diagnosability.¹⁰

Most disorders share a thread of chronic stress and dysregulation within the brain’s stress-response system. When we face stressors (whether a physical threat or work deadline), our bodies activate the “fight-or-flight” response – releasing adrenaline and cortisol through the hypothalamic-pituitary-adrenal axis. In the short term, this response is adaptive. When it is activated too frequently or for too long, it will wreak havoc on both mind and body. Research has repeatedly shown that elevated cortisol can contribute to high blood pressure, suppressed immune function, and even brain structure alteration.¹¹

The journey is clear—starting with a stressor at work or in life, continuing with that stress intensifying or at minimum never abating, and finally causing changes in the brain that leave individuals emotionally altered. We must therefore attack the source, the response, or both. Headspace allows one to do it all.

The more I study the platform, the more I find it covers preventive wellness to evaluate the source and also supportive intervention for adjusting your response.

Stress & Anxiety:¹²
- Core of Headspace product directly targets the stress-response cycle
- 2018, randomized controlled trial found that using Headspace for just 10 days reduced stress by 14% (as measured by a standardized stress scale)
- SOS sessions (3-minute meditations) to manage acute panic or high anxiety
Depression & Low Mood:
- Offers meditation courses specifically on “Managing Depression” in collaboration with a psychiatry team
- Audio sessions grounded in Mindfulness-Based Cognitive Therapy (MBCT)
- 80% of users with moderate-to-severe depression reported improvement in their symptoms after working with Headspace’s coaches and clinicians (using the app plus Ginger)
Burnout & Work Stress:¹³
- 2019, American Psychological Association research suggested that people who meditate regularly have lower emotional exhaustion and reduced job strain
- Headspace’s corporate partnerships also bring stress management workshops to the office floor (a bit ironic getting stress relief training paid for by your stress causer, but we will let it fly)

With a growing patient population in need of support, we do not need to look very far to find digital health as a proven approach to improving access. Headspace is also increasingly supported by peer-reviewed data (60 studies thus far), demonstrating meaningful impact on users—lowering stress, increasing positive emotion, spiking focus, and even reducing sick days. I would never claim that online meditation and therapy is a cure for severe mental illness. I would, however, stand firmly on the belief that this digital health ‘startup’ is a critical and scalable tool to help tens of millions to receive the care they need to improve their mental fitness.

The Economy

As I mentioned last week, unresolved mental disorders and depression have a massive impact on our personal and professional lives. It is estimated that the U.S. incurs $210 billion annually from depression-related absenteeism, presenteeism, and medical expenses. There is also an associated 35% reduction in productivity (how they chose to measure that, I am not sure).¹⁴

Headspace costs $70/year and we know it improves mental wellbeing, but does it make a meaningful financial difference?

Well, yes. Why else would I be writing this section?

In a 2022 case study, it was shown that employees who engaged with Headspace’s coaching + clinical services saw a ~15% reduction in their annual healthcare claims costs compared to similar employees not using the tools.¹⁵ Admittedly, the research was sponsored by the startup, but until we get an independent study completed, that is what we are starting with.

With that data published, it only makes sense that they would leap so aggressively into the Employee Assistance Program (EAP) space. This was a strategic shift to where mental health needs (and funding) are significant. Historically, EAP’s suffer from very low uptake (often <5% of employees use them) due to stigma or inconvenience. Headspace, however, offers a modern alternative that includes nearly any tool one needs across the spectrum of mindfulness. From basic meditation to 24/7 coaching and clinical therapy, Headspace allows employers to subscribe to one service and cover nearly all their bases.

The economic pitch to employers is clear. Burnout and turnover are costly, and companies are investing in prevention. Headspace will collect those health plan dollars to support the push against turnover. It will then, when successful, present the reduction in claims and improved employee retention to the enterprise client. All of this together not only supports the client’s bottom line, but simultaneously diversifies Headspace’s revenue model beyond the crowded direct-to-consumer app market. Headspace Health is quickly becoming a leading vendor in employee mental health services. The division boasts 2,700 enterprise clients in 2025.

We have a well diversified leader in a growing market with multiple revenue channels across subscriptions, enterprise contracts, and potentially insurance reimbursement (soon). We might have to watch closely to see when the IPO or acquisition is announced.

My Thoughts

There you have it! Our first attempt at exploring a company you have probably heard of. Unlike the last 11 startups, Headspace is wildly different in its focus and origin (all digital, less hospital, monk founded). Different as it may be, it stands just as important. I remain a strong proponent of digital health startups improving care access via the DTC and B2B models. In the critical world of mental health, this is even more so needed.

Headspace is not promising to solve all your problems—just to help you breathe through them and find a better way forward. Whether you are chasing inner peace, better sleep, or just a moment of calm between Slack pings, it is a reminder that sometimes the best ROI comes from simply sitting still. So go ahead, close your eyes, take a deep breath…and try not to overthink whether you are doing it all right. Nobody is.

To more lives saved,

Andrew

I always appreciate feedback, questions, and conversation. Feel free to reach out on LinkedIn @andrewkuzemczak.