The fitness industry has been one of many hard-hit by the coronavirus pandemic. An estimated $15 billion has been lost in revenue, and multiple value gyms, including Gold’s Gym, Cyc Fitness and 24 Hour Fitness, have filed for bankruptcy.
Just days after the lockdown, subscription-based fitness company, ClassPass, launched new features on its app allowing studio partners to live-stream fitness classes. The company also started a relief fund that permitted members to donate to their favourite studios.
"We knew it was very important that we make sure we take care of these studios, that we can hopefully keep their doors open," Mandy Menaker, the Global Head of PR at ClassPass, said in an interview with The Org. "For five months, we waived our commission entirely, sending 100% of this revenue back to studios."
Despite its efforts to keep studios afloat, the subscription-based fitness company was too impacted by the lockdowns, laying off or furloughing an estimated 53% of its 700 employees in April last year. They have since brought back more than 50 of those staff members.
ClassPass was founded in 2013 by Payal Kadakia after she struggled to find a dance class in New York City despite browsing on the internet for more than three hours. Since then, the company has grown to partner with fitness studios and gyms in over 2,500 cities worldwide and is currently valued at more than $1 billion.
In March 2017, Kadakia became the executive chairman of the company and Fritz Lanman, a seed round investor who led the company's Series A funding, stepped into the role of CEO. A Microsoft alumnus and active angel investor who backed companies including Pinterest and Wish, Lanman became a crucial player in the success of ClassPass.
"Payal realized she wanted to focus more on the vision and the brand, while Fritz was a little more interested in the day to day, mechanics and finances, so it was a great opportunity for them to switch roles," Menaker said.
Under Landman's leadership, the company began to experiment with different operating models. For five years, ClassPass members would pay a certain amount of money each month for unlimited access to fitness classes and studios. Members of the leadership team realized this operating model was not built for long term success and attempted multiple pivots before ultimately landing on a credit-based operating model in 2018. Users are now given credits based on their subscription, which they can use to book classes or wellness experiences.
"It's a currency that's used within the app," Menaker said. "By switching to the credits model, it meant we could price things differently. I would say that's when our growth really took off."
Once it's operating model was locked down, ClassPass began focusing on expanding internationally. Leading the expansions was Rachel Moncton, VP of Global Marketing. Moncton graduated from Dartmouth College with a B.A. in neuroscience. After graduation, she worked as an associate for management consulting firm Bain & Company before joining ClassPass as Director of Strategy and Operations in 2014. Under her leadership, the company grew from operations in 8 countries to its current 30.
When the coronavirus began spreading around the United States, ClassPass relaxed its cancellation policy and started rolling over full credits for users.
“We work with about 40,000 businesses around the world and this was devastating for the fitness industry and for the wellness industry who almost, overnight, had to close their doors without a clear indication of when they'd be able to reopen,” Menaker said. “We were very fortunate, having just raised our Series II, we had a little bit more of a safety net than many of these studios. So it was very important that we made sure that we took care of these studios and could hopefully keep their doors open.”
The company is now actively working on combating the virus. A month ago, it launched an in-app feature for users to search for COVID-19 vaccines. Although Members aren't able to schedule appointments through the app, they can find information on the hours of operation and nearby clinics' contact information. This service is currently available for users in Boston, Chicago, and New York City, with Denver, Los Angeles, and San Francisco soon to follow.
The team behind this project is led by Jeff Bladt, the VP of Pricing and Inventory. Bladt, who joined ClassPass in 2017, is a machine learning expert who has experience in managing data products and leading marketplace strategy. He previously founded Project Evie, a non-profit that evangelized electric vehicles and promoted more sustainable consumerism, and also served as the Chief Data Officer for Do Something, an NGO for young people and social change.
As the virus changes the landscape of the fitness market, ClassPass is now also looking to expand its product offerings. The company is now offering wellness experiences including massages, facials, manicures and pedicures, and in the coming year, is looking to become a marketplace for its users to explore different activities.
“We built our technology around the idea of making it seamless to discover and to book experiences with one credit card. Especially right now, for people that are maybe not feeling comfortable with group classes, they are still feeling pretty comfortable with a one to one experience like a haircut or a manicure,” Menaker said. “It doesn't have to be just wellness experiences, we believe that there is a marketplace for cultural experiences like museums, a concert or even a cooking class. So although our focus right now is on fitness and wellness, we believe that we can easily add experiences into the app in the future.”