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
Full Transcript of Podcast with Payal Kadakia
Nathan: Well, the first question that I ask everyone that comes on is how did you get your job?
Payal: My current job or you mean my first job?
Nathan: Yeah, your current job. How did you find yourself doing the work you’re doing today?
Payal: Such a good question. Well, so I never thought … When I was younger, I never thought I was going to be an entrepreneur. It’s not like I woke up and I was like, “I need to do this for the rest of my life.” I’ve always just been a really passionate person, in particular I was passionate about dancing because that’s my heart and soul. I think I always really believe if you follow your passions, it’ll lead you to where you need to be and that’s exactly what happened for me. I actually did have, I had two jobs before this. I was first at Bain doing consulting, and then I moved over and I worked at Warner Music Group, and I was working in the music industry. One day and I had built a dance company actually on top of my time at Warner, I just knew it was time for me to try something new.
A few things had happened in my life at the time, but my mom and I talked and she was like, “Why don’t you just quit?” I think that was the moment for me that freed me, and unleashed me into saying, “What if I had …” I felt like I had the capabilities of building something massive that would change people’s lives. I just didn’t know what it was, but I needed to figure out what that was. I gave myself two weeks to think of an idea, and I luckily found an idea that I’m happy to chat more about as well. I just knew it was on my mission to help people get connected back to their passions, especially because of how passionate of a life I had lead. So that’s how I got the job and then I created a company, and I said I was going to do this.
Nathan: Did well. Yeah. I’d love to know more around how ClassPass came about, because you guys have pivoted a couple of times with the model, right?
Payal: Right, absolutely. Yeah. So the time I’m talking about is roughly about seven years ago. So 2011 is when I quit my job. My first instinct was actually to build a search engine for classes, so very similar to open table or seamless Web, or one of these aggregator platforms. My theory was okay, why not do this in the class space and make it so you could find every class out there through one easy place. So that was the original model and when we launched it, it was … It took us a year, a year and a half to build and we had probably a million classes listed by the time we launched. One of the things that we learned in that process was obviously we learned how to get all the real time scheduled data, and keep everything up to date.
We were missing a big part which was what was going to motivate and inspire a customer to go to these classes, and to actually wake up one day and try a new yoga class, or a bootcamp or something they hadn’t before. That was really what we needed to pivot on. So then we started trying a new model out there, which was a $49 discovery passport where you had a month to try all these new things in your city. One of the things we accidentally stumbled upon was that people loved variety. To give you a sense, this was three years into building a product, right? So we were in it for three years at this point, and we started building this product which was the passport. It was a one month past where you could try these studios, and we thought people would then go back to these studios and commit and then we would make some money off of the subscription revenue of them sticking with their favourites.
What ended up happening is that people actually wanted to do the discovery pass over and over again, and they were frauding us in the sense of signing up with multiple email addresses for the same product, which you’re not technically supposed to do. As we promised our partners, we would only send people once. At the same time, we saw that this wasn’t going to work for our partners either because we weren’t going to generate any recurring revenue. So that was when we decided that we needed to take a deeper look, and also make another pivot. That pivot was the subscription model, which ultimately was ClassPass. We actually were called Classtivity at the time. So we became the Classtivity ClassPass, we launched a subscription model.
In about three months, I knew we had really hit it on its head 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. Who looks forward to working out usually?
Nathan: Got you. I’m curious, how did you meet your co founders? I know you worked at, you said you have a consulting background, you worked at Time Warner but this is like your first company, right? What inspired you to create a tech company?
Payal: It was really for me, I just believe technology can change our lives and it already has obviously. I think if you can make things easier for people, they will do more. So for me, it was all about there are thousands of events classes going on every single day. If we could bring it to people’s fingertips through technology, we could get people to do more in their life and hence have them live a more fulfilling life. I think I went to MIT, so I feel like everyone at MIT is a better of an engineer and so I loved this concept of problem solving. I think for me, I’ve always just been really obsessed with helping people live better lives and I just thought technology could really play a really big part in that.
Nathan: One thing I’ve been thinking about a lot, because I think ClassPass is massive. Every time I go to the States, everyone’s always talking about it and I first heard of you guys in the States and you guys true market dominate everywhere, right? One thing I’ve been thinking about a lot, and I always like to ask this one is this is your first business. How much of it do you think is luck versus skill, versus you’ve got great co founders and the team? A lot of people, it’s usually either that they build these really successful business like a ClassPass, most of the time it’s their second, or their third, or their fourth. It’s made different tries. So you’ve got pretty good strike rate, I’m curious to hear why you think that is.
Payal: Well, it’s a great question. I believe you create luck. That luck is formed though from a combination of a lot of things. I think one is just having faith, right? In the sense of you need to be able to have the optimistic outlook of I’m going to solve this, and know that your heart and soul is in it because things get hard and they absolutely do. By the way, it’s always a success story in hindsight. At the end of the day, right? It’s always, been a seven year journey and so I think it’s one is just having that faith and optimism. I think if you truly focus on the success, what you want to create in the world, I believe you can create it because you’re so focused on actually making it happen.
Then the other two things I would say is perseverance. You just need to persevere in the face of anything, in the face of any no, in the face of any constraint. You need to find a way through. I think the best entrepreneurs, it gets easier to do. It’s obviously, I think it’s actually harder to do in the beginning and I think pivoting actually taught me that a lot. It taught me that it’s actually better to keep reinventing and moving forward versus getting stuck. Then let’s see, the last one I would is just hard work. Luck, it’s people who’ve worked hard at the end of the day. You work hard so all those trains line up around the same time, and you can’t force it but you have to have that insight to be able to connect the dots, and make sure that things are happening at the right time.
I always truly believe if you’re a mission oriented founder, like if you’re developing something good in the world and truly are doing it from a true why, from a real deep reason of why and you’re really working hard to solve it, it’s not about luck. When I think about ClassPass working, I think about the people’s lives we’ve touched. I don’t think we were like okay, well if this person goes and then this is the calculation of this is what’s going to happen. In the beginning, actually I think we overdid that, and finally what we needed to actually just do is build a product for our customers. When we did that, we ended up really figuring out this mission, figuring out what we really wanted to create in people’s lives and the product spoke for itself.
Even when I think about building any big brand, it’s all about changing behaviour and getting people to live a different way. I think about Airbnb in the same way, who would’ve thought people would be okay with strangers living in or being in their beds? Now everybody is totally okay with that. It’s all about changing people’s perception and their behaviour. If you build a product that does that successfully, I believe you can really change the world.
Nathan: When you talk about hard work, and I’m not sure what ClassPass is valued at now, but let’s say it’s half a billion dollar plus valuation based business. How hard have you worked to build a business that size? Do you do 70 hours, 50 hours, 40 hours? Like you said, you’re very passionate about dance. Do you still have other dance company?
Payal: Yeah, I totally get what you’re saying. I am always working, my brain is always on. I think even if I’m … Actually, 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. I’m always solving some creative problem in my head while I’m dancing. I believe your brain’s always hard at work if you let it be. So it’s important to, I actually believe it’s important to work all parts of your brain, and that’s actually part of I think one of our really underlying important philosophies behind ClassPass is it’s important to be mentally and physically strong, because you can solve and challenge yourself to do more in real life, and mentally challenge yourself. So I think it’s all connected. I think I live a very full life in the sense of I plan everything into my calendar.
I’m one of those people, I actually do need sleep. I can’t operate without sleep, but I’m one of those people the second I wake up, I am 150% until the second night sleep. I love living my days like that, and I make every day full of dance work, like everything I need to do. I think the other part of it when I think about hard work is it’s also about focus. It’s about being able to not waste your time on things that aren’t important. I think I’ve learned to do that in my life, and I think I’ve just actually been like that since I was younger. I’ve always had this weird discipline in me to get my work done, and until I plan things and actually enjoy the process of it. Then be able to go in and work or hang out, or dance after. I think for me, it was always about getting good grades in school or getting my work done and I did it to myself. I built this out my own self discipline since I was very young.
Nathan: When you said you’re always on, because I think it has to be an obsession. To build anything of true worth and significance, changing the world, impacting the world in a big way like ClassPass, it has to be an obsession, right? You said you’re always on. Do you sometimes struggle to stay present when you’re with family or friends, because you are always on? Do you have any, what do you do to?
Payal: Yeah, I absolutely do. I think it’s why I’ve actually now, I schedule in the time and I set goals for myself with my family and friends as well. I actually believe the same way I am passionate about everything else in my life, I want to be passionate about my family and my friends as well. I’ve actually developed my own goal setting methodology that I use for this, but it’s something where I want to. If I’m going to go see my family, I try and make sure that I’ve done enough work, if that makes sense to make myself at a point where I’m going to show up. Honestly, there are times where I know I’m not there and I’ll cancel, because I think it’s a waste of time to go to something where you’re not present. I actually know that my friends, my family, they appreciate my thoughtfulness and my presence, and I would rather make it up to them at a time when I am than go and be there and not connect with anyone. It’s just not helpful for anyone, nor meaningful.
Nathan: Yeah. Can you tell me what’s the Gulf, how many work hours? What’s the magic number per day, or during the week?
Payal: I think it’s all…I think you do as an entrepreneur, you work all day but you have to take care of yourself and that goes in, right? So even if I am finding time to go to a dance class or workout, it’s a part of pile working hard, if that makes sense. It’s like I am not going to do the rest of it without being fueled. I think of it is fuel, I don’t think of it as I’m working or not. It’s what’s the fuel I need to keep working, the same way people need food. It’s a very similar thing for me, but you’re always working. There isn’t, it’s very hard as a founder, it’s a child. I don’t know anyone who is going to be like, I need to stop taking care of my child. It’s there, it’s always going to be there.
Once you start something and so that’s why I think it’s always important for founders to start a company that they are unbelievably obsessed with a mission about. I always say be mission obsessed, not product obsessed because you want to take, 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 because it shouldn’t be a job because it’s not.
Nathan: The reason I’m asking these questions is because I find that I’m interested in what it takes. Like what does it take to build something this size of a ClassPass? Look, I really appreciate your transparency. So tell me about the mission, where do you see, where would you like to see, what’s the vision, the mission for ClassPass in five to 10 years from now? What’s the Everest Mountain that you and your team are climbing?
Payal: Yeah, absolutely. So one of the coolest things is I believe ClassPass has a relationship with customers that no other product has, and that relationship is around time. We have people book multiple hours of their life every month on our platform, and that is something that you don’t do on any other app. When you actually go on and you schedule things that you’re going to go do and say yes to because of us. We’ve now done over 45 million reservations, and I think of that as 45 million hours of people’s lives we’ve touched. I think about what our expertise is as a company and it’s very similar to Amazon in the sense of I truly believe Amazon started in books obviously, but their expertise is not necessarily about the book. It was about getting it to your doorstep, right? You ordering it and getting it to your doorstep.
I think very similarly, the expertise of ClassPass is getting you to discover something, say yes to it, schedule it in and attend. I think there are many amazing experiences and things in people’s lives that they can do where we could help them get there, and attend that they haven’t done before. I just think there’s a magical feeling with that because there’s really no customer brand, or not even app that really just helps you place your time. Time is the most important thing we all have. I truly believe that’s something that ClassPass has that’s really unique, and truly what makes people love us is because we give them special time in their life, and ours to focus on themselves. In the end, we helped to get them there. So when they feel better, they are thankful to us because we helped to motivate them to get there.
Nathan: It sounds like you guys have a plan to move into other verticals, not just kind of classes or fitness related or dance?
Payal: Yeah, that is the North Star of the company is around that absolutely. Obviously, every company it’s important to focus. I think for us, we figured it out really well in one category. Yeah, we’re looking forward to continue to expand that.
Nathan: Yeah, amazing. One thing I also wanted to touch on when you talked about perseverance, I agree it is difficult to know when to persevere and not. The first iteration of the company Dabble NYC, would you say it was like a search engine, how did you know to pivot versus … What advice do you give to founders? How do you know when it’s not working? How do you gauge versus going down this path that is the right, you found your business model, right? You were seeking it and now you’ve found it, you’re sticking with it. How do you know versus perseverance?
Payal : Yeah. Well, so there was one major problem. I was solving a problem which was how do I get people to class. I had zero maybe 10 reservations over a year. So to me the actual, I wasn’t solving my problem. I think a lot of people get stuck because you have to know what problem you’re solving. It’s usually, this is where I always love going back to you need to know what problem you’re solving and the mission you have because without that, it’s very easy to say, “Well here’s a product I want to build and why don’t people like the product I built?” It’s easier to pivot when you know that you’re trying to solve a problem, and you might need to actually just try a completely different solution on how to solve that problem, and the solution can be a different product. You have to be okay with moving in a different direction, but none of these things are ever failures.
I think it’s also important to learn from wherever you are, and then very quickly be able to say, “Our data is telling us this, or we are completely off the mark.” If you’re completely off the mark, try a total different solution to solve that problem. If you’re close, then it becomes a little bit more about optimising.
Nathan: I see. So you guys just had your metrics that you were looking for, and they just wasn’t really working and you just knew that you had to take, yeah.
Payal: Absolutely. It’s more than a metric, I think it was [inaudible 00:23:32] of the company. Without a reservation, we had no business, we had no impact, we had no partners. So I think it’s always important to know what that metric is for any company when you’re starting it, to know what your true north is, like what are you … It’s obviously easy to get caught in revenue, but revenue actually isn’t always the best indicator either or profit necessarily because you actually have to know if your product is working, and engagement is a total different metric especially in a subscription business.
Nathan: What are your guys’ biggest challenges right now? I don’t know of any other competitors in this space. I’m sure there must be some, but what are your biggest challenges right now in terms of growth and reaching? Like I said, we talked about that mission and that North Star.
Payal: Yeah, I think we’re constantly expanding into new cities. I think what’s really amazing is that there’s a lot going on in digital as well as in the physical environment for fitness today. I think for us, we’re really excited to be able to reach more people through a digital component of our business. So that is something, an opportunity that we actually are really excited to be, we’re launching something new this year where people can work out from anywhere. We think that’s great because we know so much about what people love about fitness, and we want to bring that to more people. So that’s definitely an area that we’re working on. We’re just making our product better and better, and to work for more and more people.
It’s amazing once you have a platform and these many eyeballs on you, and it’s great to be able to continue to get them to engage in different areas. So we’ve also realised some people like studio boutique fitness, other people might like going to the gym. So we’re working on different ways to connect more with gyms, and bring even a more robust product out there.
Nathan: So you’re going to do eventually maybe some sort of virtual reality stuff eventually? It’s that kind of path
Payal: It’s going to be a live class, yeah, hosted from our studio. It’ll be a live class where people can have a heart rate monitor at home, and we’ll be tracking it all real time so you can work out in real time with other people.
Nathan: Yeah wow, that’s so cool. One thing I have to ask you as well, we have to work towards wrapping up was just on the business development side. I imagine it would have been really tough in the early days. Like you said that building a truly impactful brand, you have to change people’s perceptions. Just on the business development side, working with the studios that at the time that might have been quite a foreign concept even to now. To this day, you guys I’m sure must have some challenges and difficulties with working with other studios. I just love to hear, were you doing the Bizdev and tell me around how you pushed through that. I’m sure you would have got a lot of rejections through a lot of studios, and all sorts of things. Am I right there? That would have been really tough, right?
Payal: It was tough but at the same time, we started in this market I think when a lot of studios started opening. A lot of them needed some marketing help. They needed ways to get new customers and actually many of them are offering a first class for free. That was actually our passport product, that middle product we had was actually packaging together free classes for people. So they were just trying to get someone to come in the door. So for us, what we really wanted to help them with was bringing new clients into the door because we realised how intimidating it was for anyone to sign up for a studio at a point that they hadn’t been to before. That really became the cornerstone of how we first started.
What’s nice is when we actually pivoted a bit more to the subscription, we started going to the studios and saying, “Hey, we don’t want to offer you zero. We actually want to pay you now.” We increased the price and we were able to pay them on a more recurring basis. So I think what was great is we really approached this by understanding the businesses of our partners. Meaning we went in, we tracked inventory, utilisation and capacity. So we walked in there not saying we want every spot, which we know that there’s other places that have done that and I think have actually been not great for growing these businesses. I think for us, we were like well, we only want to really send clients to you for your excess capacity. So we would go and study that with them a little bit to see when they needed space or room.
I think a lot of that, they weren’t able to always look at that information and so we were able to provide that to them, and also show them across industry stats and metrics that also helped them continuously grow their business. At the end of the day, it was really about volume. Many of these studio owners have fixed cost businesses, and so we were really just trying to send them incremental revenue anywhere we could with new leads that would fall in love with their studios.
Nathan: That makes sense. So you just made it all about them, and how you can provide them as much value as possible.
Payal: Absolutely. Our partners are, they’re our customers too. At the end of the day, like I said we’re connecting people to our amazing partners. They’re the ones who actually are offering the class. I think it’s a really important thing to make sure that they are valued, and they know that they are the epic crux of everything that has made ClassPass, ClassPass.
Nathan: Love it. A couple of last questions before we wrap. Can you have it all? Like you’ve got a great company, you’re having a lot of fun, you’re growing quite fast, making a big impact on the world. Can you have it all, is it ever enough?
Payal: Such a beautiful question. I think having it all is a matter of perspective. I think it changes over your life, over your time, over your company’s journey. At the end of the day, I think it’s all about having like I said, 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. I’ve always been like, we’ve been talking about this recently because I think so many companies are raising capital. Sometimes I’m like look, if you want to have, if you really love like making cupcakes or doing something that is very one off with a customer, you don’t necessarily need to raise capital. You can really be a great entrepreneur and have a small business, and still be changing people’s lives. So it’s a matter of what your purpose is, and I think everyone’s is different.
Nathan: I love that. So I’m going to ask you a question. I’m not sure if you’re comfortable answering it. By all means if you’re not comfortable answering it, please just tell me. So one thing you mentioned around being mission focused and you’re obsessed with the mission, don’t be product focused, be mission focused, right? You guys have raised, you just did in May last year, you did series C. You raise 7 million. So you guys have raised a large proportion amount of capital and you do have this lot really from the sounds of it, very, very long term vision for the company. When you I guess raise capital and sell equity in your company, there is that intention to sell one day and a form of liquidity will take place.
So what I’m curious around is for founders that are tossing and turning between selling shares within their company, to raise capital to grow faster and then obviously an exit will be assumed at one point in time. How does that make you feel? Would you be comfortable with the thought of potentially having to sell ClassPass because investors want to return?
Payal: It’s an interesting question. I think for me, I’m a very ambitious, clearly optimistic, dream oriented, visionary founder. At the same time, I’m also practical at the end of the day. I think it’s always finding that blend and I think it’s important to be able to look at the numbers and what’s right for your customers, your partners, your business, and at the same time continue to keep moving forward. One of the principals I think I’ve really lived by with the company is you earn the right to do the next thing. I think that’s a really important thing. So I think when you’re at a point where you’re making lots of money, you can invest more in your product and keep growing. I think that’s the mentality I have in terms of, I think I’ve also surrounded my team, my board with people who are here because of this big vision and because of what I was just talking about earlier.
So I think it’s hard when people aren’t aligned. I can definitely see that happening in companies and I think it’s tough, but I think what’s nice is everyone’s here for the big vision. Obviously at the end of the day, markets change, things change and you have to be practical as well. I think as an entrepreneur, you have to think about that as well but I spend most of my time dreaming absolutely.
Nathan: Awesome. All right, we’ll look our last question Payal, is where’s the best place people can find out about yourself and your work?
Payal: I would say on Instagram, I feel like that’s where I probably post the most stuff.
Nathan: Okay. What is your Instagram? It’s just your name, right?
Payal: Yeah, it’s @payal yeah. P-A-Y-A-L.
Nathan: Awesome, and if people want to find out more about ClassPass you can go to classpass.com, right?
Payal: Absolutely. Yeah, ClassPass or even @classpass via Instagram handle.
Nathan: Awesome. Well, thank you so much for your time. It was absolute pleasure.
Payal: Thank you so much, Nathan. Yeah, absolutely.
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