Challenger to Watch 2017: ClassPass

Challenger to Watch 2017: ClassPass

For taking a risk. Or three.

 

As a fit person once said, if you want to stay motivated, you should do the kind of fitness you love. Given I live in the city and there isn’t immediate access to any national parks for a good hike, or a pleasant ocean pool for a brisk lap, for me and the rest of city dwellers, we must inevitably turn our efforts to the local gym. It’s not all bad, there is a certain amount of motivation that goes along with watching £60 evacuate from my bank account each month. And having the knowledge that if I tried to quit, I’d have to take out a small mortgage to pay the break fee.  

Payal Kadakia, CEO of ClassPass, thought that was rubbish too.

After fruitlessly spending two hours searching online for an open ballet class in New York City, Kadakia decided there must be a better way for people to access the forms of fitness they love at a time that suits them. If people had greater access to a broader range of fitness styles, they would be inspired to move more. Her mission, therefore, became to democratise fitness; unlock the otherwise contractually binding world of gyms, and allow people to be fitness tourists.

ClassPass was born in 2013. The business model combines the breadth of a marketplace with a subscription pricing structure; $99 a month for a membership of unlimited classes. ClassPass has spent the last few years expanding rapidly, now operating in 31 U.S. cities and eight across the U.K., Canada and Australia. Mid last year, however, it encountered a problem. The platform was working too well.

The business model has changed a number of times to enable Kadakia’s vision for a global fitness platform to meet the changing behaviours of consumers. And in a way that’s profitable.

ClassPass discovered that people were enjoying their new found fitness freedom and attending far more classes on average than the projections. Because ClassPass pays its studio partners every time someone books a session, the model had started to become unsustainable. To dampen demand, memberships were capped at five or ten classes a month, with the unlimited class membership almost doubling in price to $190/month. This decision saw the company lose 10 percent of its user base overnight and outraged customers took to social media.

Luckily, Kadakia has grown comfortable with taking such risks. ClassPass is actually the third iteration of the platform. The first, ‘Classivity’, launched in 2010 as an activity timetabling platform. Since then the business model has changed a number of times to enable Kadakia’s vision for a global fitness platform to meet the changing behaviours of consumers. And in a way that's profitable.

Perhaps in order to satisfy disgruntled members, ClassPass has recently launched some new features - a social aspect that allows you to see what friends are doing on the ClassPass schedule, and video on-demand, at-home workouts to open up access beyond studios and gyms.

Upending a category doesn’t come with a roadmap, so ClassPass has had to lean into risk and adopt a test and learn approach. What will be interesting to see this year, is whether its users have the patience to stick with ClassPass after their latest pivot. Personally, I’m waiting for the fifth iteration, instant access to hikes and ocean swims. It’s 2017 after all.

Cecelia is a strategist at eatbigfish. An Australian who’s found her home in South East London. She loves a good meal and a good chat.