#80 Founder Payal Kadakia on Building ClassPass into a Billion Dollar Company

What this episode is about

Payal Kadakia, founder of ClassPass, discusses her journey in transforming her startup into a billion-dollar company, emphasizing the importance of setting deadlines to foster creativity and innovation. Her unique membership model has revolutionized access to fitness classes, making it a leading health club aggregator with over 30,000 partners globally, despite facing numerous challenges along the way.

Key takeaways

• Deadlines fuel creativity; give your mind a timebox to hatch brilliant ideas.
• ClassPass's initial flop taught resilience—sometimes failure is just the first step to success.
• Building a startup is about solving problems, not just launching products; relationships often trump tech.
• Pivoting isn't quitting; it's a strategic realignment to tackle genuine market needs head-on.
• In a world of digital convenience, the human touch in business relationships still reigns supreme.

Who speaks in this episode?

• Lynn Tomman (Host) · 8 min speaking
• Payal Kadakia (Guest) · 19 min speaking

What is discussed, and when

1. 0:00 – 5:00: ClassPass, Pyle Kadakia, Life Pass, Bain
2. 15:00 – 20:00: Warner Music

Notable quotes from "#80 Founder Payal Kadakia on Building ClassPass into a Billion Dollar Company"

• Unlimited Fitness classes such as Dance Yoga martial arts boxing and indoor cycling for a subscription fee class pass is the world's largest Health Club aggregator with more…

  about ClassPass · at 0:36

Who and what is mentioned in this episode?

People

• Pyle Kadakia — Person · Main guest · 1 mention · first at 0:27
  Founder of ClassPass discussing her entrepreneurial journey, pivots to product–market fit, leadership decisions, and her book.
  And Columbia Lynn tomman hi everyone it's Lyn toen welcome to another episode today I'm excited to be with classpass found ER pile kadakia class pass offers a revolutionary…

Books & papers

• Life Pass — Book · Primary recommendation · 1 mention · first at 1:10
  Book written by the guest, detailing her journey and insights from founding ClassPass.
  Who have founded and built unicorns and an even smaller number of women and people in their 20s who have done so she has just written a book called life pass welcome pile and…

Companies & orgs

• ClassPass — Company · Business focus · 1 mention · first at 0:27
  Primary company discussed in the episode, detailing its founding, growth, and business model.
• Warner Music — Company · Referenced company · 2 mentions · first at 1:26
  Former employer of the guest where she worked before founding ClassPass.
  Conversation today thank you so much so pile you'd worked at Bane as a consultant and you were working at Warner Music when you decided to give yourself two weeks to come up…
• Bain — Company · Referenced company · 1 mention · first at 1:23
  Former employer of the guest where she worked as a consultant before founding ClassPass.
  Welcome pile and thanks so much for our conversation today thank you so much so pile you'd worked at Bane as a consultant and you were working at Warner Music when you decided…

Full transcript with timestamps

0:00 welcome to the three takeaways podcast which features short memorable conversations with the world's best thinkers Business Leaders writers politicians scientists and other newsmakers each episode ends with the three key takeaways that person has learned over their lives and their careers and now your host and board member of schools at Harvard Princeton and Columbia Lynn tomman hi everyone it's Lyn toen welcome to another episode today I'm excited to be with classpass found ER pile kadakia class pass offers a revolutionary membership that lets members use health clubs and book unlimited Fitness classes such as Dance Yoga martial arts boxing and indoor cycling for a subscription fee class pass is the world's largest Health Club aggregator with more than 30,000 gym club Partners globally I'm excited to find out how pile built her startup into a unicorn that is a startup valued at over a billion

1:00 despite many setbacks along the way pile is part of a very small number of people who have founded and built unicorns and an even smaller number of women and people in their 20s who have done so she has just written a book called life pass welcome pile and thanks so much for our conversation today thank you so much so pile you'd worked at Bane as a consultant and you were working at Warner Music when you decided to give yourself two weeks to come up with a business startup idea why two weeks I went out to San Francisco to visit actually one of my Bane colleagues and I realized in that moment that I wanted to try something new in my own career and of course I could have tried to interview at another job or I could have looked at other Industries but I loved this idea of Entrepreneurship that I was hearing from so many other people in San Francisco and I decided that having a deadline would enable me the chance to

2:01 really give my mind the actual ample time it needed to really focus on thinking of an idea without feeling like I could think of an idea forever and I really believe sometimes time boxing something enables your mind to really meditate on it and force yourself to think about it so that's what I did and I wanted it to be two weeks because I felt if at the end of the two weeks I didn't have an idea that maybe I should be pursuing other options that I had laid out in my career planning but it didn't really preclude me from being able to do that and at the same time I ended up thinking of something which obviously changed my life can you tell us about your first product class activity yeah so our first product was actually just a search engine for classes so very similar to open table we listed and aggregated millions of classes and their time and dates into one scheduling platform where people

2:54 could search like yoga in Chelsea at this time and it would list all the class for you in search engine format and that was a first product idea I raised about a million dollars for it it seemed like an idea that would work we put it out there and no one went to class and it was a very devastating moment for me as a Founder but I learned a lot in the moment and I'm thankful for it at this point in my life versus feeling that oh it was a failure it taught me so much to in a way make that mistake over such a long time frame to say and tell myself as an entrepreneur that I would never do that again most people first of all are never able to raise a million dollars but you are able to successfully raise a million dollars you built a beautiful website and at that point most people would not have been able to Pivot as you did they might have just kept trying what they were doing even though it wasn't working how

3:49 did you decide from there what to do next I think the core of all of this the pivoting iterating that we've done as a company came down to the fact that we weren't there to put out a product we were there to solve a problem and for me it was okay this step didn't work in solving the problem how was I going to approach it the next way did I realize that the first year after I built it no I mean I was still a budding entrepreneur trying to figure out the way of the world so it was hard it took me probably another month or two of trying to change the website trying to do more emails trying to resolve the problem with what I had built versus sort of taking a new Step that I started with but very quickly I realized that the path we had taken was not going to get us there we had really missed this right so you're throwing darts I was in a very different playing field and where I knew I needed to be and it was hard to

4:42 get the whole team to sort of reenergize around building a new product but I knew we needed to go and have a different mindset and have a different group of research in a way to really be able to go after and solve the problem and until we solve the problem we were never even closer done with it so this idea of quitting wasn't even an option because we still were there and there was a problem in the world that needed to be solved creating a website is very different from building Partnerships with health clubs and gyms around the world how did you decide to Pivot so far how did you come up with your new business idea well it was exactly that we started talking to a lot of the partners and I think for the first year of our life as a company we were stuck behind the tech right we were stuck behind the website because we thought the website and Technology would solve the problem for us but what we really

5:36 needed to do is build human relationships and understand what our industry needed so we started going out and talking to yoga studios Dance Studios pilat studios and started realizing that so many of them needed new customers in the door they needed a way to get people to discover them many of them were local businesses with fixed cost and they would rely on foot traffic but they didn't really have another aggregated way to send a massive amount of traffic to them and obviously like spending on ads and stuff was just not economical for them so we needed to find a better way for them to have new clients that were going to stick with them and so we decided that we would transform the system a little that we had built and instead of it being a search engine we would become this Discovery Place for people to just try new classes so our second product was actually a product called the passport

6:25 where people could try 10 different classes over a 30-day period and they could go to these different partners that we had started working with and when we started it was only 20 venues so 20 to 30,000 has obviously been a journey but that's really what we needed to really figure out what product Market fit was and I think that's something we talk a lot about as entrepreneurs is this idea of making sure your product actually works in the market you're in and we realized it wasn't about building some beautiful website it was really about fulfilling reservations and making sure our partners had someone who would show up at their door to take class and when we really started focusing on that and building the relationships and understanding the problems on that side that's really when we started going in a better Direction you said you learned a lot from failing the first time what did you learn first time we failed I learned

7:18 many things I would say the first thing I learned was people did not want to go to class by just looking at a search engine which was hard for me to realize because it's what we had spent money on I learned that there was an interest in people wanting to take classes so people were definitely coming to the website they weren't following through and booking a class so that really made me realize wait a second if I could get people to the top what was pivoting them and preventing them from getting me to the other part of it and I recently was just telling you one of the people who I looked up to is BJ fog at Stanford who is a behavioral design specialist and he has a whole model about how you can motivate people to do something so while we had built this tool that helped people search what we had not done was actually motivate anyone to go to class and so what we really needed to do is figure out what was going on in their

8:11 brain in their actual ability to go to class and one of the things that we thought a lot about was the brain cycles that happen in that moment so most people are scared to try a new class right if you're going to a boot camp you're not going to just jump into that class then there was a timing issue of am I busy or not busy at that time then there's a price issue right of do I really want to spend $30 to go to this class so we were putting three huge decisions for somebody in one moment and all science that we've researched in this shows that in a moment like that if you're going to put so many big decisions together what are most people going to do click out of it they're not going to follow through and actually book the class so that's so much of why the search engine didn't work it was a behavioral design issue and we really realized we needed to figure out the motivational factor in getting someone

9:03 to even try that first class and so it was interesting what during that time one of the things we even did is we told everyone to go to class for free so we literally to out one of the variables we sent an email saying buy one class get one for free thinking everyone would jump on this because we thought money was an issue we still had two to three signups only and that's when I realized the brain cycle issue was the one that was really holding most people back and we really needed to find a way to unleash people to want to try new things so once we started bundling the classes into more of this experiential thing where hey for a month you get to have X amount of classes if you buy this one membership it started feeling like okay I'm paid for it on day one and now every class I go to feels like I'm a kid at a candy store where I can do anything and so that helped work through the fear most people had when they were trying

9:54 new classes because they no longer were thinking about fear they were thinking of opportunity what could I do with my time not oh no what if I do this and I don't like it so we had taken away so much of it and it became something more of I want to get it versus something that I don't want to go to and I'm scared to go to so much of when I think about the brand and what we've been able to do is we turn Fitness into this obligatory thing that most people were scared of and to be honest I came from that as well being I'm a 411 petite person like I never felt like I belonged in that industry to making it something that was fun and accessible and more of this fun opport Unity of what could I do what could I try and that mentality shift in someone's mind is really what transformed our product and when we discovered people wanted this sense of variety and adventure with classes that's when the entire model took off

10:46 clearly you did not think in terms of failure because if you had you might not have continued so how do you view failure it's not an end point is it it's a data point it's a way to learn it's a way to understand what is not working and help you figure out how you're going to move forward failure and success to me are very similar they are both just points in the journey that are getting you to that end point or that journey of where you want to get to in your true north you can't get stuck at either you have to take what they give you and move forward and I think it's a lot of the times with especially with failure you're worried about what other people are going to think you're worried you're not actually doing and I think over time I have learned to never get stuck in Failure it's about moving forward it's the same way with success you reach these great Milestones as a company but it's really about what's the next day

11:38 going to be what are you working on next to go to help people even more and I think that's the mentality you start to live by instead of having those highs and lows you start realizing you're on a journey that's great and Grand and you just want to keep reaching either your mission or fulfillment whether that's as a human being or not you talked about product Market fit when did you know that you had it I remember so clearly and I think a lot of times people think that they have product Market fit when you've got like thousands of users using your platform and you have this crazy hockey stick growth for me we had the hockey stick growth but it was really four five emails that I read from customers we were doing customer service at the time my name was Pam and I was literally interacting with so many of our customers and I remember reading these few emails that told me that this product had changed their life it had

12:30 made Fitness Fun it had given them confidence it had transformed the way they thought about what they could do with their time and my background I had been dancing since I was three years old and so much of the reason I started this company was because dance gave me this place where I felt so alive and I fought for it through my MIT days my ban years even my class pass days and the reason I did it is because it was so important for me to find that time because it made me confident it made me feel centered and that was what I finally felt I had given to everyone else when I read those emails I had given what dance was to me to them and that's when I knew I had product Market fit and on a more marketing level I remember I was in my elevator a few months after going up to my apartment and there were a few girls talking about it in the elevator and that's when I also knew wow people really love this product and I think

13:23 when you hear other people talking about it is when you really have the most belief in it because as a Founder especially at that point I had tried a few things and it wasn't working I think when you really get the validation from your customers and your partners that's when you really know you have product Market fit and once you had that product Market fit you had essentially at least it seems like you had hockey stick growth you had to grow really quickly and I think you talk about that and you talk about hiring 60 people in a weekend in your book can you tell us about that about growing so quickly what that was like growth comes with positives and negatives one of obviously the negatives here was that it spurred competition across the entire nation on people who wanting to build the class pass model in their city as well and because it was a local play it was something that made sense for

14:16 different cities to have as a leader I wanted to really look forward and not focus in on the competition always but as a founder and as someone who wanted to protect this business and knew the network effects of having everyone being on one platform I knew I needed to fight and we were going to launch in eight cities by the end of the year we said we would launch in 20 and that meant hiring 60 people over a weekend to get salese out there to sell class pass in these new markets and train them and we did what we had to do and I think once you set a goal as a founder and what you need to do to achieve it you just you go for it you learn to work through all the roadblocks and really that's at the core of so much of what I feel like my book is about is just working through Road blocks whether they are more real roadblocks like money time skills not having the people or if they are mental like expectations and

15:06 fear of failure you just have to put a plan together and then go and execute and that has never failed me I love your quote from leadership expert Robin Sharma that on the other side of your greatest fears lives your greatest life can you tell us about that and how you actually did it that quote always reminds me about the day I quit my job to start class pass because I think quitting your job in your 20s is one of the scariest things you can do because you don't know what income you're going to have and I think being the daughter of two immigrants from India I know that like security was so important to them so being on this other side where I wouldn't have that income every single month and that base of office and all of that infrastructure was scary and so I remember walking into work that day having conversation with my boss telling him I'm going to be moving on I didn't actually know exactly what I was going

16:03 to be doing at the time but I knew I had to take a leap for myself and I ended up writing this email to the leadership team at Warner music group and the vice chairman of the company decided to call me to his office and wanted to hear about my startup and I was like great like I can come up right now and tell you about it and so I was explaining to him how I wanted to build this database of classes like open table and he goes great I want to invest here's $10,000 and in my mind I couldn't believe it like this was the day I was so scared about but here I was on the other side of it walking out of that building with a $10,000 check towards my next adventure and next product I wanted to build so I think for me when I realized that I could open so many more doors when I was doing something I loved that's really what that quote meant to me was that on the other side of my greatest fears which was closing this

16:54 door so many more doors open for me and I saw that happen so much more as I started living my dream and really pursuing what I really wanted to be doing I know you think in terms of a plan A and A Plan B what does living a plan a life mean for you I think when you were living your plan a you really are able to thrive authentically and not let expectations stand in your way I think when we see people live their plan they do great things because they are not limited by other people's thoughts and expectations but they are going for what they are really truly meant to be doing whether that's on Earth and with their time and I think the greatest like athletes the greatest entrepreneurs of our time the greatest inventors are all people who have decided to live their plan a I think when you're living your plan B you're compromising on something and you have to ask yourself what are you compromising on and why and I think

17:53 so much of it is working through that compromise right you can't do it immediately I think that's that's part of what I think is so important to do is to figure out what constraint or compromise is in your way and put a plan to work through it it's not going to change in a day if you don't have enough money or if you don't know the right people figure out a way to do it gradually and strategize around it so you can end up on the other side where you are living your plan a what were the most important decisions that you made at class pass I would say the most important ones were obviously becoming a subscription model from day one and I think that was it took us three years to figure that out that this meant to be a monthly membership not an open table like model I think that was a very important part of the whole system is knowing that people wanted to be a part of this discovery process that they

18:45 really wanted to do on a monthly lifestyle-esque basis not just let me just do this for one month or even one class the second one wow there's been so many along the way I want I talk about scaling really quick I think that was so important because it taught us how to scale it taught us how to have a Playbook that literally has allowed us to launch across the globe whether that's Asia Australia I think that was a critical part of it I think building a incredible team having an incredible even for me I decided to not be CEO in 2017 and bringing in somebody who could run the team Fritz landman who has been an incredible investor to me I think those decisions are Paramount is making sure your company and product is being led by the right people because as a leader you cannot do everything and you have to learn how to scale yourself and scale your idea and your vision and that comes from trusting and hiring great

19:43 people so I think hiring great people is definitely one of the most important decisions I've learned to do and enable but I've made in the company what do you think are the most important leadership characteristics that enabled you to succeed think it's my Sheer Drive and passion towards my why I think I have strengths and weaknesses like all leaders do but at the end of the day when I believe in something and I care about it I'm able to bring people along with me because I just care so deeply and I'm doing it for a why I'm not doing it for fame or money or power I'm doing it because I deeply care and I think that motivates anyone to get on board with you because it's authentic I think there are times in my life where I probably felt like oh I needed to get money for this or whatever and all those times in my life when I wasn't living authentically even I always remember there were times where I

20:38 stopped dancing and I'd have my team say hey like are you dancing because they would know that the inspiration of all of this came from something I loved and I protected in my own life and so it comes down to that authentic leadership but like I said it's about fighting for something you deeply deeply care about it also seems like your your ability to make decisions quickly and your bias for action helped drive your success 100% I think every entrepreneur making decisions is a key part of it the more you sit and stay comfortable that's literally money wasting away right if you have employees if you have infrastructure rent you literally want to use every single one of those days and that resource of time and money wisely and that's really what it comes down to is what decision are you making to try something new to move things forward and essentially not running out of money because that is the only thing

21:36 that when you've really failed for a company and I hate saying this but it is true is when you're out of cash that's the end day so you just have to do whatever you can with when you have that time and money to use it as wisely as possible and so making hard decisions whether that's with people with time and resources it's so important to be able to keep moving forward and not to fear failure when you're doing things as quickly as you were like hiring 60 people in a weekend you can't get it 100% right no you can and and once again it's about acting quickly in whatever mistakes you've made and not letting it sit if you've hired people and they're not working out I don't think I've ever heard anyone say like oh I fired that person too quickly it's always usually too late it's one of those things where you just have to learn how to go quickly and make decisions and honestly it works out for both people whenever I've let go

22:26 of someone or any of that and I always always check in with them a year later and by the way everyone's in better places because of that people want to be in environments they thrive in whether you're the leader or the employee what was your philosophy through Co well that was an interesting one I actually had a baby six weeks before Co started so it was an interesting time for me personally as well as professionally class bu was coming off of its greatest month ever because January is always such a great time we had reached unicorn status it was incredible but it very quickly changed as obviously so many of our partners shut down we froze all the accounts that we could for our customers and the heartbeat of the company was reservations and we couldn't get people to class so it was really tough from that perspective to really think about what we were going to do but we really wanted to make sure that we survived

23:18 this not just as a company but our partners so it really became about how are we going to get through this as a company and how are we going to help our partners get through this because that was the most important thing we knew there was going to be another side of this we all were going to get there it's just a matter of time and we needed to survive it so it was obviously about survival making sure that we were smart about our cost and then being able to send as much revenue as we could to our partners by allowing them to teach either virtually to our customers or letting them take their on demand classes you also launched new products during Co the focus on online classes exactly being able to have people still take classes online and send Revenue to our partners was obviously a very very big part of it I think one of the really fun things that we did during Co was start actually exploring some of the other categories

24:09 so when I actually started the business we were actually not just in Fitness we were in Creative classes as well so we were doing all different types of classes and experiences and through covid we had a bit more time to rework the product and we started adding a lot of Wellness experiences to the platform so we've got things like m es and acupuncture and nails and Beauty on there as well which was always a part of the vision of how we can keep enhancing people's lives and time and so that was a blessing of CO as we were able to work on that but the number one thing was protecting our partners in the business to get through this period and helping people work out as much as they could through our online product you've been working on class pass now for about a decade and just sold the company to a wellness company what's next for you this question is always so hard for me because this decade has been

25:02 unbelievably incredible and I'm looking inward right now because I want to chart the next decade of my life and that doesn't happen by just kind of going and doing a bunch of things it's really about doing what I know lights me back up so I'm dancing I'm building an Indian ballet to tour next year which is really important to me to tell the stories of the people and who I am and who my ancestors are so I'm really excited about that I'm investing and Advising incredible Founders especially women which I love doing and being able to offer them guidance from my own journey and on top of that this book you know I'm really excited I've had a really interesting decade and I even think before that with my dance company I'm excited to help people learn a little bit of how I was thinking to see if it can help them and just try to help them live their dreams and Alla anything stand in their way before I ask for the

25:55 three takeaways you'd like to leave the audience with is there anything else you'd like to mention that you haven't already talked about I think we've talked about most things I guess the only one thing which I think is so important is time and not feeling guilty I think so much of my journey comes down to being really particular about how I spend my time and not feeling guilty about it and I think that's such a key muscle for anyone to learn and you can learn it at any age because the more you start prioritizing your life with your own priorities and living your schedule focused on that and not other people's that's really when you can truly Thrive I love your mission statement every life fully lived that's exactly what it comes down to is time and hours of people's lives what are the three takeaways you'd like to leave the audience with today number one get started I think we get stuck sometimes and don't know where to

26:53 go but I really think it's important to get started in any direction because it's the only only way you're going to gain that confidence number two I would say be authentic to yourself don't let expectations of anyone else ever stand in your way really truly hear your own voice and number three do some goal setting because it will help you in really being able to identify exactly what you want to achieve and move forward and make progress hle thank you this has been wonderful thank you so much for having me Lyn if you enjoyed today's episode and would like to receive the show notes or get new Fresh weekly episodes be sure to sign up for our newsletter at 3 takeaways thatcombines

Questions about this episode

Who speaks in "#80 Founder Payal Kadakia on Building ClassPass into a Billion Dollar Company"?

Lynn Tomman (Host), Payal Kadakia (Guest).

What is "#80 Founder Payal Kadakia on Building ClassPass into a Billion Dollar Company" about?

Payal Kadakia, founder of ClassPass, discusses her journey in transforming her startup into a billion-dollar company, emphasizing the importance of setting deadlines to foster creativity and innovation. Her unique membership model has revolutionized access to fitness classes, making it a leading health club aggregator with over 30,000 partners globally, despite facing numerous challenges along…

What is mentioned in this 3 Takeaways episode?

5 people, works and ideas are mentioned, including ClassPass, Pyle Kadakia, Life Pass, Warner Music, Bain. Each one on this page links to its own page with every episode that mentions it.

How long is "#80 Founder Payal Kadakia on Building ClassPass into a Billion Dollar Company"?

The episode runs 28 min; the transcript is about 5,494 words in 31 timestamped sections.

More from 3 Takeaways

• All analyzed episodes
• Books mentioned on 3 Takeaways
• People mentioned on 3 Takeaways
• Topics mentioned on 3 Takeaways