Sitting in her pink and turquoise Manhattan office one afternoon in late April, ClassPass cofounder and CEO Payal Kadakia is a bit sore. The classically trained Indian dancer spent the past weekend at a showcase but says she still plans to log onto her ClassPass app to schedule a barre workout class later in the week as she’s been doing for years.
Not just a loyal customer, Kadakia is the inventor of the hugely popular monthly membership service that gives subscribers access to a wide range of fitness classes. For a monthly fee, her customers can sign up for an unlimited number of classes in everything from pilates, spin classes, boxing and boot camps to aerial yoga, pole dancing and underwater spinning. She founded the business in 2010 and it’s now valued at an estimated $400 million; Forbes figures Kadakia’s net worth is at least $50 million, enough for Forbes to include her among eight women entrepreneurs on the rise.
ClassPass CEO Payal Kadakia is worth an estimated $50 million, and she’s just getting started. (Photo by Noam Galai/Getty Images for TechCrunch)
Born the younger daughter of two chemists who immigrated from western India, Kadakia grew up cheerleading for her New Jersey public school’s football team and dancing on the weekends. She started her classical Indian training in a friends’ basement at three years old and also taught herself Bollywood-style dance after watching films in her bedroom. In college at Massachusetts Institute of Technology where she majored in economics and operations research, she started an Indian dance troop, and after graduating, she founded Sa Dance Company, which she still leads today. “When it didn’t exist, I had to build it. I had to dance,” she says.
At first Kadakia, 33, took the traditional work route, getting jobs at consulting firm Bain & Company and later Warner Music Group. It was only after wasting hours searching online for the right New York City dance class six years ago that she realized she had an idea for a startup. “It became this miserable experience. The websites didn’t give me enough information. I didn’t know which class I should take. And I ended up not going to class. There was so much friction holding me back when I actually wanted to go and do something for myself that day,” she recently told Forbes.
What is now ClassPass wasn’t so quick to get off the ground. In fact, Kadakia failed twice. She originally cofounded Classivity in 2010. Its first product, an OpenTable for class schedules, got a lot of page views but couldn’t get clients to book – a problem since Classivity’s business model was based on its booking rate. Later in 2012 the company launched Passport, which gave users 10 chances to try one class at a new studio. But users wanted to go back to the classes they loved and started hacking the product by signing up with fake emails. Kadakia then realized the product needed to change a third time to make sure studios stood by her company in the long-term. “We’ve pivoted our product several times…until I knew we were getting people to go to class, I wasn’t done. I wasn’t okay with building technology and putting it up there. If someone wasn’t going to have that experience, I wasn’t creating a dent in the world,” she says.
ClassPass started taking hold after Kadakia and her other cofounder Sanjiv Sanghavi, who Kadaki knew from childhood, brought on Mary Biggins during the end of its Passport phase. Biggins, who had a strong marketing background from fintech startup Betterment and also Vistaprint, was named a cofounder and helped bring the startup to scale. (She left this year to focus on her own company, MealPass, which uses a ClassPass-like model to streamline work time lunch orders.) The first successful iteration was born in 2013: $99 a month for a membership where users could attend an unlimited amount of classes. The catch was just three classes a month could be in the same studio.
It was a huge hit and soon ClassPass was expanding into other cities. It was also getting the attention of venture investors, all of whom have seen her dance. “I need them to understand where the center of this is. I need them to know why this company exists and a lot of it comes from heart, passion and driving other people to find that same exact thing in their life,” she says. The company has raised $84 million in funding (aside from early pre-seed money from family and mentors), according to Pitchbook. That includes $30 million raised in its latest round led by Google Ventures in November 2015.
Today ClassPass, which is available in 34 cities across four countries, has estimated sales of $60 million. To keep building the business Kadakia has been leading a sales evolution at ClassPass too. It started offering a five-visit package for between $40 to $75 a month, depending on the market, and in a select handful, a 10-class deal for between $100 to $135. This Spring, it also raised the price for its trademark unlimited package in New York City (potentially ahead of more cities) in a controversial and risky move. It is now charging $190 a month for returning users and $200 a month for new clients. Raising prices will likely help ClassPass move from a revenue-generating phase to making good profit. “We need to make sure that we are building a sustainable business model around it,” Kadakia says. ClassPass is now working on continuing to expand internationally and launching a personalized recommendations algorithm. Kadakia adds that usage on the app has doubled in the past year, and ClassPass retains studios that let customers book a class through the app 95% of the time.
Her long-term vision puts the company in a broader spot than it currently is. Her plan is to create a “life pass” offering “soul-nurturing experiences” like cooking classes, massages and more. “It’s really about living an inspired life. We want to connect people to experiences which make them feel great. People come to our app to book the hours of their life,” she says.
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