According to Financial Times News, Tom Pickett, who became CEO of Headspace in August 2023, is steering the mental wellness company toward AI and big corporate deals. The company, which merged with Ginger in a $3 billion deal four years ago, now makes over $200 million in revenue and is EBITDA profitable. Pickett recently launched a text-based chatbot named Ebb and is upgrading it to voice this week, while simultaneously scaling back full-time therapists to cut costs. Headspace has seen a 12% drop in monthly average users year-over-year, which it attributes to a shift from direct consumer subscriptions to employer and health plan partnerships. A new deal with Cigna will make the app available to an additional 7 million people in the US through 18,000 employer health plans, adding to the 5.8 million users already accessing it via over 4,500 organizations worldwide.
The AI Therapist Dilemma
Here’s the thing: Pickett is making a huge bet that AI can solve a scaling problem in mental healthcare. He calls the old model of one-on-one therapy “inefficient,” and he’s probably right from a pure numbers perspective. But his warning that “people are using AI tools not built for mental health” is a bit rich coming from a guy who just laid off therapists to fund his own chatbot. He insists Ebb is only for “everyday emotional regulation,” not acute crises, and has safety systems to escalate serious issues. That’s the line they have to walk, and it’s incredibly thin. One misstep with a vulnerable user, and that “15 years of a brand” he’s so proud of could evaporate overnight. The whole situation feels like a high-wire act between genuine innovation and cost-cutting dressed up as progress.
From App to Corporate Benefit
The real story isn’t just the chatbot. It’s the complete business model pivot. Headspace is actively fleeing the fickle consumer app market, where it’s losing to Calm, and running straight into the arms of HR departments and health insurers. Pickett admits it outright: signing with a health plan means you go “millions at a time.” This is the future he’s banking on. But let’s be cynical for a second. Is this about providing better care, or is it about selling a scalable, low-touch “wellness solution” that companies can tout as a benefit without actually fixing toxic workplace cultures? The Glassdoor reviews calling Headspace ironically numbers-focused suggest employees feel the tension. The mission is mental health, but the metrics are millions of users and profitable EBITDA.
A Rocky Road Ahead
So where does this go? Pickett says an IPO is a long-term goal, but they need “flexibility” now. That’s corporate-speak for “we’re not ready for the scrutiny.” The path is littered with challenges. Can an AI voice, even a carefully constrained one, ever provide the nuance of human empathy? Will the safety protocols hold under real-world pressure? And can they convince enough Cigna-sized partners to buy in to make this sustainable? The gamble is that AI-driven “emotional regulation” tools are the mass-market product for our anxious age, while serious therapy remains a separate, human-led service. It’s a compelling theory. But building it without breaking trust, or breaking people, is perhaps the hardest tech problem anyone is trying to solve right now. The stakes couldn’t be higher.
