Payal Kadakia, Founder, ClassPass
Taking Center Stage With Payal Kadakia
An accomplished dancer and now entrepreneur, ClassPass founder Payal Kadakia shares how she grew a successful startup rooted in her own passions.
A skilled performer and choreographer who has been dancing since she was 3, Payal Kadakia never imagined she would one day be an entrepreneur. Even so, the founder of ClassPass has taken center stage in the entrepreneurial world, making lists such as Fortune’s Most Promising Women Entrepreneurs and Marie Claire’s Most Influential Women in America.
“I always truly believe if you follow your passions, it’ll lead you to where you need to be,” Kadakia says. “And that’s exactly what happened for me.”
It was that lifelong passion for dance, in fact—an activity she calls her “heart and soul”— that inspired her to create ClassPass, a platform that helps you find and book classes in 8,500 fitness studios in 50 cities around the world. Now, with million of users signing up for everything from boxing to barre, Kadakia’s using her passion to help others connect or reconnect with their own.
A Mission to Change Lives
“Why don’t you just quit?” That was the question, posed by Kadakia’s mother, that set it all into motion.
“That was the moment for me that freed me,” Kadakia recalls. At the time, she was balancing her job at Warner Music Group with her fledgling dance company and knew it was time for a change. That single question reaffirmed that her fate was in her own hands, and she could always leave her day job behind and start something new.
“I felt like I had the capabilities of building something, something massive that would change people’s lives. I just didn’t know what it was.”
So Kadakia gave herself two weeks to come up with this massive business idea that would change people’s lives—no pressure, right? But she is nothing if not persistent, and in the end, Kadakia did come up with an idea that would help people reconnect with their passions: a universal search engine for all kinds of fitness classes.
It was 2011, and while platforms such as OpenTable enabled users to search and reserve spaces at restaurants, there wasn’t anything like that in the fitness space. Kadakia, who had always been frustrated by trying to find a ballet class that matched her own busy schedule, conjectured that people needed one platform that brought all the options together. So she took her idea and ran with it.
Launch, Pivot, Pivot: The Choreography of Growing a Startup
It took about a year and a half for Kadakia and her team to build that search engine, and when it launched under the name Classtivity, she estimates there were 1 million classes listed with real-time schedule data. That made scheduling fitness classes easy, but Kadakia soon faced her next big hurdle: motivating users to actually attend these classes.
That problem inspired Classtivity’s first pivot. To overcome the motivation issue, the team launched something called the Passport. This $49 pass let customers try out new classes over the course of a month.
“One of the things we accidentally stumbled upon was that people loved variety,” Kadakia says. This realization came three years into building the product, while observing how customers were using the service over time, and it shaped the future of the company.
With the launch of the Passport, the assumption was that customers would try out all these new studios and then go back to the ones they loved and commit to a membership. That way, both ClassPass and its partner studios would make money from the recurring revenue. As it turned out, that wasn’t the case.
“What ended up happening is that people actually wanted to do the discovery pass over and over again,” Kadakia says, explaining that people were gaming the system by signing up with multiple email addresses to buy the same product, something they were technically not supposed to do.
ClassPass had promised its partner studios that it would offer people the Passport only once, so when customers started signing up again under different email addresses, its partners weren’t making any money on repeat classes. So in 2013, ClassPass made its second pivot to a subscription model. The way it works today, users choose one of three ClassPass membership levels that give them credits to apply toward the classes of their choice. With one account, ClassPassers can create their own custom workout schedules across multiple fitness studios. The company now works closely with its partners to ensure these ClassPass signups are boosting their revenues by filling excess capacity.
“In about three months, I knew we had really hit it on its head,” Kadakia says, “because I got these letters from people that just explained how this product really changed their life, and they were looking forward to working out in a way they never had—and who looks forward to working out, usually?”
Focus on the Problem, Not the Product
When we’re knee deep in product development and the day-to-day operations of a startup, it can be difficult to see things objectively and know when to pivot. After having pivoted twice, Kadakia has some advice to entrepreneurs in similar situations: “You need to know what problem you’re solving.”
Without knowing that and your mission, she says, you may be tempted to focus too much on the reasons people don’t like your product. Knowing when to pivot becomes easier when you refocus on the problem. That might mean creating an entirely different product, and you have to be okay with that. “None of these things are ever failures,” Kadakia reminds us. They’re learning opportunities, a chance for you to look at what the data is telling you and correct course.
“If you’re completely off the mark, try a totally different solution to solve that problem,” she suggests. “If you’re close, then it becomes a little bit more about optimizing.”
For example, Kadakia set out to solve the problem of getting people to attend fitness classes. After launching her solution, a search engine for classes, she estimates about 10 reservations were made over the course of a year.
It was clear Kadakia wasn’t solving the problem she had set out to solve. Instead of wasting time wondering why people weren’t using her product, she and her team pivoted to a new solution that they felt would better serve their customers.
How to Make the Most of Partnerships
With a global network of 8,500 studios, ClassPass relies heavily on developing partnerships with businesses, and the way it handles them is really part of the genius of its business model.
When ClassPass launched in 2011, it began partnering with new fitness studios. These studios were fixed-cost businesses that couldn’t afford to have too many empty spaces in their classes. They needed marketing help, and that’s where ClassPass stepped in. The Passport product it launched was a clever way to capitalize on the fact that many studios were already offering the first class for free; the Passport was just a way to package them all together into one easy solution for new users.
But what’s really been key to succeeding with partnerships is that ClassPass has worked to truly understand its partners’ businesses and to help them grow. The ClassPass team went in and tracked inventory utilization and capacity. And instead of asking for every spot to sell to its users, they helped studio owners study industry data to help forecast excess capacity that ClassPass could then help them fill. The idea was to send these studios additional revenue anywhere they could by sending them new leads that would fall in love with the studio.
For ClassPass, its partners are its customers too. “They’re the ones who actually are offering the class,” Kadakia says. “And I think it’s a really important thing to make sure that they are valued.”
Fitness and Beyond: What’s Next for ClassPass
Beyond getting you in shape, ClassPass’s true expertise, Kadakia says, is getting you to discover something new, say yes to it, schedule it, and attend. Because of this, ClassPass is looking to expand its product line. In February 2018, it began offering beauty and wellness services to a subset of users in New York City. In March, it launched ClassPass Live, which allows users to take fitness classes in real time with live-streaming video and a heart rate monitor.
As ClassPass expands, you can rest assured its next moves will be based on its core expertise. The way Kadakia sees it, her company helps people decide how to spend the most important thing they have—time.
“And I truly believe that’s something that ClassPass has that’s really unique, and truly what makes people love us,” she says.
What does it take to run a company with explosive growth like ClassPass? As it turns out, a lot of dedication and obsession—about the right things.
“I am always working,” Kadakia says, without a hint of regret in her voice. “When I think of me dancing or working out or any of these things, the reason I actually think it’s important is because I feel like…it’s all connected.”
She says she solves creative problems in her head while she’s dancing, schedules everything in her calendar, and will cancel plans with friends and family if her mind is still on work and she doesn’t feel she can be truly present with them.
“It’s a waste of time to go to something where you’re not present,” she says. “My friends, my family, they appreciate my thoughtfulness and my presence.”
Despite her packed schedule, Kadakia assures us that she does carve out time for some shut-eye. “I can’t operate without sleep,” she says, “but I’m one of those people, the second I wake up I am on 150 percent until the second I sleep. And I love living my days like that.”
One can’t help but wonder if the same rigorous discipline required of a professional dancer is what shaped Kadakia into the powerhouse founder and executive chairman she is today.
“I’ve just actually been like that since I was younger,” says Kadakia, who still serves as artistic director for the dance company she founded. “I’ve always had this weird discipline in me to get my work done.”
We’ve all heard the unbelievable habits of legendary founders who pulled all-nighters, worked 80-hour weeks, and did everything in their power to get their startups off the ground. They pursued their ideas with an intensity baffling to most people. So does every founder need to be obsessed with their company in order to succeed?
“I always say be mission-obsessed, not product-obsessed,” Kadakia says. “If you’re not willing to take that mission and try and solve it for 20 years plus or take it to your grave, it’s maybe not the right thing for you.”
Create Your Own Luck: What We Can Learn From Payal Kadakia
To date, more than 45 million reservations have been made through ClassPass. In 2017, the company came in second on Deloitte’s Technology Fast 500, a list of the fastest growing technology companies in North America.
To any aspiring founder, it sounds like Kadakia is living the dream. But don’t tell her it was a lucky break. “I believe you create luck,” she says, “and that luck is formed, though, from a combination of a lot of things. I think one is just having faith.”
While many founders start two or three companies before they hit it big with something like ClassPass, how did Kadakia manage to do it on her first try? “It’s always a success story in hindsight, right?” she says. In reality, building ClassPass has been a seven-year journey with two major pivots—hardly a hit from the start.
Here are three lessons Kadakia’s entrepreneurial path can teach us:
- Your heart and soul must be in it. “When I think about ClassPass working, I think about the people’s lives we’ve touched,” Kadakia says. ClassPass was founded partly because of her deep love of dance. She wanted others to be able to experience the active lifestyle she enjoys, so she created a membership platform that lets you easily find, book, and attend fitness classes. The steady determination Kadakia has displayed over the past seven years of building ClassPass can be credited to her passion for its mission. “You need to be able to have that optimistic outlook of, ‘I’m gonna solve this,’” she says. “And know that your heart and soul is in it because…things get hard. They absolutely do.”
- Perseverance is key. Pivoting her company two times is what helped Kadakia build perseverance. “It taught me that it’s actually better to keep reinventing and moving forward versus kind of getting stuck.”
- Know your purpose. Instead of chasing profit, investors, or growth, Kadakia urges entrepreneurs to stay rooted in their purpose. “It’s all about purpose, and what your purpose is, and what your company’s purpose is. I don’t think every company needs to be huge.”
So many companies are raising capital, but if that’s not aligned with your mission as an entrepreneur, that’s okay. “You can really be a great entrepreneur and have a small business and still be changing people’s lives.”
- How passion and success are closely related and how entrepreneurs can connect the two
- Why having heart and soul in business is crucial for problem-solving
- The partnership model that made ClassPass so successful
- Why the size of your company doesn’t matter if you follow your mission
Key Resources From Our Interview With Payal Kadakia
- Learn more about ClassPass
- Like ClassPass on Facebook
- Follow ClassPass on Twitter
- Follow ClassPass on Instagram
- Follow Payal Kadakia on Twitter