How One Fitness Entrepreneur Raised $14 Million
On a recent Monday, Payal Kadakia placed her hand on a ballet barre, lifted her right arm, and pulsed her fingertips skyward. Clad in all black, hair pulled back, she moved with the grace of a woman who points and flexes her feet as effortlessly as most people text.
Airy, mirror-walled spaces like this Avant Barre classroom in downtown San Francisco feel like home to Kadakia. As a founder of ClassPass, a monthly subscription service for fitness classes, she finds herself in them often, talking with studio managers, meeting ClassPass users, and, of course, working out.
“I basically live in workout clothes,” she says later over a mug of green tea.
But Kadakia, 31, is not an exercise enthusiast in the mode of Jane Fonda or Tracy Anderson. She doesn’t care if the users of ClassPass end up with trimmer thighs or carved-out midsections. She simply wants people to break away from their desks and devices and do more life-enriching activities. If they happen to work up a sweat, that’s icing on the proverbial (perhaps gluten free) cake.
“Some people have that school of thought where fitness isn’t enjoyable, but we’re making it enjoyable, I think, by making it more fun, challenging, and engaging, rather than this boring thing that you have to do,” she says. “It’s about using technology and data to change this experience.”
Here’s how ClassPass works: subscribers pay $99 a month to be able to take classes at dozens of different fitness studios in a given city, like New York, Los Angeles, and San Francisco (ClassPass plans to expand to more metropolitan areas next year). The company receives a bulk discount on classes—some of which can go for upwards of $35 each—from their providers in exchange for helping them reach new customers.
“We’ve gained a lot of fans of the studio who would never have tried it because it wasn’t in their neighborhood or it didn’t seem accessible for them,” says Nini Gueco, founder of San Francisco’s Avant Barre, which opened in June. She chose to work with ClassPass over group discount providers like Groupon and Living Social because Kadakia’s company “attracts the right individual, someone who is actually looking to discover classes.”
There are limits: a ClassPass user can visit the same studio up to three times per month, and some studios block users from signing up for classes that regularly sell out. But by giving people easy ways to mix up their workouts—say, boxing one day, aerial yoga the next—the company hopes to displace standard monthly gym memberships as the default option for exercise. Kadakia likens it to “the Pandora of workouts.”
“We want people to use it,” she says, as opposed to gyms whose membership rosters are rife with clients who pay but rarely go. “The No. 1 metric that the whole company stands behind is our reservations number. We obviously need to hit our business metrics, but if the number of classes people are going to starts declining, that’s bad for us.”
Last year, ClassPass facilitated 50,000 class reservations; this year, they’ve done more than one million. In September, they announced $12 million in new funding, in addition to the $2 million in seed funding they raised in March.
“I was sort of surprised that they weren’t being swamped by more investors when I got in touch with them,” said Fritz Lanman, who sold his mobile recommendations company Livestar to Pinterest in 2013 and led the ClassPass’ most recent financing and invested in their seed round. “They’re improving people’s lives, literally. Not many companies can say, ‘We’re making people healthier and happier.’”
ClassPass was born out of Kadakia’s frustration with finding an activity of her own. While working in the digital strategy and business development division of Warner Music in 2011, Kadakia—a dancer since the age of 3—spent an afternoon tumbling down an Internet black hole, searching for a ballet class to attend that evening.
“It was the most miserably frustrating thing,” she says. “A class is an hour and it took me an hour to find it.”
Later that year, Kadakia founded Classtivity, a kind of OpenTable like system for reserving spots at fitness classes. While trying to market the company, she met her eventual co-founder Mary Biggins, who previously built marketing campaigns for brands including the National Football League and Disney. Together, they tweaked the company’s model and at the beginning of this year relaunched as ClassPass.
With more than 1,000 classes currently in their system, ClassPass is kind of a golden ticket for workout fiends. But Kadakia has visions beyond “living the sweaty life,” one of the company’s unofficial mottos. Down the line, she envisions offering things like cooking classes and music lessons, and she sees ClassPass as a lifestyle rather than a fitness brand.
“We’re not trying to be Nike,” she says. “It’s about evolving into new products that are going to make people’s lives better.”
Kadakia practices what she preaches: she is the founder and artistic director of the Sa Dance Company, a South Asian dance troupe based in New York, where ClassPass is also headquartered. Launching that group made her realize how rare it was for young professionals to partake in healthy hobbies (i.e., those not based around alcohol).
“I woke up every Saturday morning and I would go to rehearsal, and everyone else would be going to brunch and getting drunk,” she says. “I was like, ‘I’ll meet you later, but I want to go do something I care about first.’”
She considers herself lucky to have a career and a passion project, and hopes ClassPass will help other people find their mind-body cocktail of choice, too.
“It’s about empowerment, enrichment,” she says, citing Oprah Winfrey’s mantra, “live your best life.” (She considers Winfrey a business idol, along with Steve Jobs.)
“We require you to commit and have an experience,” Kadakia adds. “We want you to find that thing that will make you life better.”
Sheila Marikar is a writer for the New York Times, Fortune, Bloomberg Businessweek and others.