How I Built This with Guy Raz - HIBT Lab! ClassPass: Payal Kadakia

Episode Date: May 12, 2022

When Payal Kadakia first appeared on How I Built This in June of 2020, the future of ClassPass, a subscription service for in-person exercise classes, seemed very uncertain. The pandemic had shuttered gyms and fitness studios across the world, and ClassPass was relying on virtual events and wellness offerings in order to stay afloat. This week on How I Built This Lab, Payal returns to talk with Guy about leading ClassPass through the worst of the pandemic and eventually selling the company to Mindbody in October 2021. Plus, Payal discusses her unique method of goal setting and her new book, LifePass: Drop Your Limits, Rise to Your Potential.Listen to Payal's original How I Built This episode: https://wondery.com/shows/how-i-built-this/episode/10386-classpass-payal-kadakia/See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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made it feel less like a visit and more like we were actually living there. Plus, taking a trip is the perfect time to host your space on Airbnb. Your place with all of its personal touches and its amazing location could make someone else's vacation even better. Your home might be worth more than you think. Find out how much at Airbnb.ca.com slash host. Hello and welcome to How I Built This Lab. I'm Guy Raz. This is the place where we break format and experiment with ideas and stories that you might not hear on our Monday episode and also a chance to find out what happened. do some of the founders I've interviewed on the show in the past. So back in June of 2020, I had Pyle Kadakia on the show, and you can go check that out in our podcast queue. Pyle co-founded the fitness brand Class Pass. It's basically like Expedia or Kayak, but for fitness classes.

In January of 2020, ClassPass raised a round of financing at a $1 billion valuation. And for Pyle, it was an incredible validation of a business that had its ups and downs. In its early days, class pass was a way you could sign up for all kinds of classes, photography, cooking, singing, you name it. But over time, it became a really powerful force in the fitness industry. All seemed to be going well until, of course, March of 2020, when the pandemic all but shut down fitness centers across the U.S. and around the world. When Powell was last on the show, she was dealing with layoffs and even uncertainty over whether class pass would make it. But late in 2021, ClassPass was acquired by a company called Mind Body for an undisclosed amount. Now, Piles just released a book about how she learned to become a leader and live a life of purpose.

It's called LifePass, Drop Your Limits and Rise to Your Potential. And Pyle is here to talk more about it. Welcome back. Thanks for having me back, Guy. All right, let's pick up where we left off in June of 2020. at the time, as we all remember, gyms and studios across the U.S. were closed, actually across the world. And I think around that time, Class Pass had to lay off, you know, almost half of its employees. And I remember on the show at the time, you were so generous because it was a difficult time, and you were very open about what was going on.

I remember you said, we're going to have to go backwards before we go forwards. So tell me about the rest of that year, the rest of that year, the rest of 2020 and how you managed? One of the hardest things about the last two years was the uncertainty and the sense of things are going to open back up and rebuilding marketing strategies to get our customers back into class and then all of a sudden having another wave, right? I think that was the hardest part of this journey because, look, we as a company, I think, had always been resilient and had always.

been able to change, right? And I even at the top of the pandemic, we flipped over to video and live workouts. And it was something that, you know, we knew as a company, we had to keep people moving and we had to keep revenue moving to our studio partners. But the longevity of this was one of the hardest things. But, you know, it's interesting because I don't now think about it as going backwards because I think what we actually did was really worked on making sure that the efficiency, the cost structure of our company was honestly at a place where it should be. And I think you probably know this from all the people you've talked to. When you're a high-growth startup, you just go, right?

At all costs, you just move. And it was actually a nice place to be, to be able to reassess things, to be able to create efficiencies to, you know, decide if we really needed, you know, X, Y, and Z product on there or not, right? And we never really got a second to have that breath. So of course, this uncertainty was the hardest part because every single time we wanted to, like I said, you know, get everyone back onto the program and relaunch all the memberships. We would all of a sudden be faced with, wait, we need to go backwards again and we need to take everyone back. But in the midst of all that, I will say that I think the company definitely found positive ways to move forward. And that was, you know, obviously less in terms of impact and purpose, which is what is always most important to me.

but more in terms of operational efficiency and the bottom line. You guys, I remember you were saying that you were kind of back in startup mode, which was kind of exciting. You said, you know, you were trying all kinds of things. You were thinking about maybe cooking classes or offering comedy classes. And you told me you were kind of throwing things at the wall to see what might work. What were some of the things that you guys tried? Yeah, we had different, you know, live experiences we were trying.

So, you know, we saw people like wanted to do magic at home and different experiences that people were still doing, but they were finding ways to bring them to, you know, their homes, right? Obviously, with a small group of people. And so we started looking at that. We just saw that it wasn't exactly as scalable. We had obviously done a lot of video innovation and testing, which, you know, stayed on the platform. And then the other one, which actually did stick, which was something a part of something we had actually tried right before the pandemic was, we went into beauty and wellness. And that actually ended up sticking because what we realized is people were more comfortable with more of that one-on-one experience versus the group experience, which comes more in beauty and wellness.

So we actually saw that take off more than we thought. And we did end up investing a bit more in the wellness category of our business. What did you learn about yourself as a leader during that time? You know, this was also, you know, there was a lot of conversations going on about representation, diversity, all of that, right? So I think there was just so much emotion going on. And I remember going to, you know, some team meetings and I've always really been a pretty emotional human being. You know, I talk about that a little bit too in my book. But I like to lead with a sense of heart and empathy and I knew that everyone needed it. And I remember there was this one session. I think we were

talking about, you know, Black Lives Matter and all that stuff. And I think I almost cried. Like, I literally had tears in my eyes. And I remember afterwards thinking about that vulnerability. And I think that's really what people needed because we were all human going through such a tough time. And to remind everyone that this is everyone who needs to get through this, including, you know, even me as a as a new mom who had a three-month-old, there was real fears in the world, right? I mean, people were losing people. Like, it was not an easy time, right? And we knew that, of course, the business mattered, but the lives of our team and actual humans in the world mattered the most during that time.

I remember there was a moment where I said, you know, are you scared? Are you worried that you might not make it through? And you said, you know, class pass, I've been at this for eight years at that point. you said, you know, we've been through so many ups and downs, so many crisis points that I kind of, I'm almost ready for this. You know, and I was impressed when you said that because it was a crisis moment. But did you really feel that? Or was a part of you that was kind of freaking out? I just knew that we were going to figure out a plan. You know, I think with the people that were a part of my team, right, the investors I have. I just knew that there was going to be an other side of this.

And here's the one thing I've really fundamentally always believed is the platform we built at Class Pass was here to stay. Right. We had changed human behavior. And I knew this, right? I think I may have spoken about this before. But when I went out to Singapore and I saw people working out, right, or going out to Hong Kong or Australia, and I realized that we had built a product that wasn't about, you know, one demographic or wasn't a trend, it was literally about changing. human behavior. Platforms like that last, right? So I knew that this was a matter of navigating

this time. It wasn't something that was going to destroy the human behavior. And I think that's what I fundamentally knew and believed from, you know, the second we caught magic in a bottle, right, in 2013 with this product. And I honestly think as a founder and yes, and all the things I had been through, I'd been through so many ups and downs at some point, they start to, they start to get a little bit more mild. Of course, this one was a little bit more of a tall mountain we had to climb. But I do believe, and I think it's important for all of us to realize that is the true north of the company didn't change. We just got a massive tree that fell in front of us.

And we needed to navigate our way through it. It was going to create a delay in a lot of our plans, which it, of course, did for us in so many companies. But there was another side to this. And I think that's really what I believed. And, you know, and we're still here. You're listening to How I Built This Lab. Stay with us. We're going to be right back in just a moment with more from Powell Kadakia.

Hey, welcome back. We are with Paul Kadakia and you're listening to High Builders Lab. So, Powell, you made it through 2020. And by the end of 2021, Class Pass was acquired by a company named body. I'm assuming that was the best decision for the long-term health of the company. Yeah. And, you know, I love talking about the relationship of Mind Body and ClassBass because I met the founder of MindBody when I was a five-person team at TechStars in 2012. Wow.

This is Rick Stolmire, right? Yes, Rick. And actually, it's a really interesting story. So Clactivity, which is what we were called originally, we got into this TechStars program. and we ended up on the cover of Ink Magazine back in 2012 before we had launched a product. And Jill, who is Rick's wife, who was also working at my body, saw us on the cover. And they lived in San Luis Obispo.

And they decided that they were coming to New York. And she said, we should go meet with this team. So this is 2012. I haven't even launched anything at this time. Wow. And we had dinner with Rick, Jill, and our team. And during that conversation, I mean, Rick and I, 100% connected. I mean, I was obviously in, you know, my late 20s at the time. I was, you know, just this idea-oriented founder and I just had a dream and I wanted to do it. And he said, you know, go and build this and maybe we'll work together one day. And he knew that we were actually building the classivity platform based on the API that MindBody had. So we had worked very closely with MindBody from day one. And MindBody, just to kind of give us a sense of what they do. Yeah. So they are the back end.

SaaS platform that many of our studios use. So they do the reservation systems. They help with a lot of payments for their employees and teachers. So it's very much a back-end system that many of the studios would use. And now what that gave us was, as you can probably think, all the class information that we have is constantly changing, right? The reservation numbers, the inventory numbers. What Mind Body helped us to do from day one was have all that information, right? So we didn't have to scrape that information or overbook classes. We were tied right into the inventory and reservation platforms of many of the studios we would work with, right?

So my body had been at it for, I think, since 1980. Like they were around for a very long time. And this actually, you know, when I was starting the business, a lot of people told me I had to start with the technology first and not go in through the consumer side, right? Because if you look at Open Table, if you looked at Zoc Doc, a lot of them were approaching this through first, go and sell a SaaS platform. into the various partners and then you build the consumer end on top. Right.

And I didn't want to do that. And I remember a lot of advisors saying to me, wait, we've never seen that. And I'm like, no, I'm going to go build a consumer platform. I'm going to figure it out. And luckily enough, we stumbled upon this mind-body API and ended up, you know, forming a way to kind of have the same type of infrastructure behind class pass. So if you can imagine, if this was really the basis to the foundation of our partnership back in 2012, it only grew, right?

as class was got bigger and, you know, more studios, obviously were working with them as we launched literally across the globe. It was one of those things when we would launch a city. We would, you know, make sure that a lot of studios that we were working with were on my body because it made it literally a click of a button for us to go and partner with a studio versus having to go in and manually get their information and build out inventory tools and all of that. And over time, we did, you know, expand on our own ability to do that because not everyone could afford my body at the time because they obviously were more of a premium product in in the space. But, you know, we knew that they were working with the top studios that we were working

with. So over time, we just built a really great relationship. And, you know, I think every year, it was a conversation that I think would probably come up on both sides. And so I do believe it was a matter of when, not if, these two companies would come together. And I think given everything that the industry had gone through through the pandemic, we kind of knew that this was. the right time to join forces, not just for ourselves, but honestly, so we could put our great skills that we've, you know, both have towards helping the industry on the other side of this, which we knew it needed. It really reminds me a lot of the story of PayPal. PayPal was, was initially grew organically through eBay users, right? They were, they loved it. And

over time, eBay realized that this was a really important asset for their users and they acquired PayPal because it made sense. I mean, And that began as a, you know, a business relationship, which grew into a much bigger relationship. And so it's one of those stories where you never know, right? Like you take the opportunity to meet somebody 10 years ago and you just, you never know what's going to come of it. I completely agree. I think that's why, you know, whenever you, especially as a founder, you're starting a company, you know, these relationships, especially the ones that are partnerships, right? you just never know when it can come together. And on the opposite of that, I would also say,

don't start a company thinking it's going to be acquired by this company or that company, right? I think a lot of times people box themselves into that. That's the opposite of this. We were always knew we were close together, but we were never, like, that's the only option we have. And I think that's also important. Powell, I know it's still early since the acquisition. So I hope this doesn't sound like I'm being a nudge here, but you're so young. I mean, you've built one successful company. Do you have another one in you? Do you think? This is such a great question. I actually talk about this in the afterward of my book, how someone five years ago asked me this question, which stuck with me. He said, how does it feel that you'll never build anything as big as

class fest in your life again? And think about that for a second, right? Just as a founder, and I was probably, like you said, it was in my early 30s. And it really stuck with me. And I think when, you know, we went through this acquisition and it's obviously such a bittersweet moment, I remember having to really think about what does that mean when someone says big? Yeah. I was never chasing big.

I was chasing impact, right? And it's, it was an interesting conversation I had to really have with myself. Do I have more impact in me? 100%. that is not a question for me. Will it be a company? Will it be something in the arts? Will it be something else?

I don't know, but I do know that I will continue to move forward and live out my purpose. I mean, as anyone who heard your original episode of the podcast, your dream was to become a professional dancer. I mean, you built a dance troupe. Absolutely. Yes, I did. Saw a dance company. That was my first company. So maybe there's a, you know, maybe there's a new opportunity for dance schools.

Yeah, I mean, I'm actually working on an Indian ballet that is going to hopefully tour as the pandemic proceeds. And I honestly, for me, 10 years ago, when I started on this journey, I chased what was making me passionate, right? And that's what led me here. And I, in a way, know that that's what's going to happen here, even though everyone, there is a path for founders, right? after they exit, which is sometimes start a new company, become an investor. I'm trying really hard to really make sure I give myself the space to welcome what that next problem I want to solve is, because that's really what started all this, is a problem I wanted to solve. It wasn't me going, oh, I'm going to be a founder of a tech company or that. It was literally me thinking about what impact

do I want to have in the world. Yeah. I should mention for people who don't know your story, is that you weren't and aren't just a dancer. You were like a world-class champion dancer. Like Ted Turner, I don't know if a lot of people that don't know this, Ted Turner started CNN, won the America's Cup in the 70s. He was one of the greatest sailors in the world, right? And that was like his other thing that he did. And I thought of you when I read about Ted Turner because this was like,

you could have become a professional dancer. Yeah. That was a potential possibility. I mean, you know, there are still challenges in the space I'm in. So I'm in, you know, Indian classical and folk trained dancer. There are no platforms for Indian dance really at the professional level still. So yes, of course, that has always been on my mind. And something that, honestly, when I started Saw Dance Company in 2008, that was really what I wanted to do is build something like Alvinale, right, that was about culture and arts together to help elevate the beauty and, you know, the understanding of where I had come from.

So yes, while at the end of the day, I know my company is great, it's hard because we haven't had a chance to be at the professional level. But, you know, we've recently made some amazing, you know, or had some amazing wins. And I am really excited because I do think, especially with all the conversation of representation that's been going on, I do think that a lot of that is changing and people are much more welcome to it. So, you know, there's definitely, you know, positive things that have happened. But yeah, the company has been a very big part of my life. and journey. And I'm excited about the future of SA for sure. Awesome. All right. So, Hyle, you have this new book out. It's called Life Pass. And I love how you do this. You frame it with a bunch of questions that we're meant to ask

ourselves, like what drives you or what makes you stand out or whose life are you living, which I love that question. Tell me, tell me about what you wanted to say in this book. So for me, I always felt that people always ask me, how did I do this? Which obviously people can just listen to your podcast to get that. But honestly, I think especially for me being a woman of color, an Indian woman, right, I really knew I lived by a different set of rules and methodologies, and I knew I had to give that to other people. It honestly felt like a responsibility for me to do this. You know, the people close to me knew I operated by a different way of life and a different set of rules. and that's how I always got things done.

And at the end of the day, it wasn't just about accomplishment. It was about fulfillment, right? It was about always creating stuff that truly felt impactful and helpful to people. And I wanted to help other people do the same. And of course, throughout my life, I've been around Taipei friends who obviously have everything together, but they are looking for purpose, which is why I start the whole book with a sense of what is your calling, what is your purpose. And then I have other friends who I know are deeply purposeful, but they need the rules and the tips of how to get things done.

And I really wanted to bring both of them together because I think usually the business books are for one group of people, right? And then the more purposeful books are for another set of people. And I wanted to create something that was more in the middle that was going to help create the bridge for the two communities. When you thought about who this book is for, did you think about it for somebody like you when you were starting out? or do you think about it for somebody who is trying to figure out their direction or somebody maybe further along their journey or all those people? You know, at first I thought about it as somebody more in their like 20s the same way. You know, I'd come out of college and figuring out the world. Yeah.

But I will tell you this, in my own journey, honestly, in the past two years, right, being at a place where I've gone through a career transition, I had a baby, COVID happened. And I remember actually going back to my book and realizing that these tools and tips are actually muscles you have to develop to be able to say, what is my true north? How am I going to work through the different constraints that the world puts on me, whether that is society's expectations, which especially, by the way, for a woman, will always be there, right, at every different phase in your life. It's you need to have a muscle to work through that, the fear of failure, which comes at any point in our lives, right? And then there's always real constraints in our lives of time and money and people, which I talk about each one of those in the book. And I realize that this is about a roadmap for anyone at any phase in our lives to, you know, you might have your purpose, but you might need to work through a constraint. And once again, you might be at a place where you're searching for that purpose and go ahead, find it. And then don't let anything stand your way to get there to the ultimate place where you want to.

Hey, we're going to take a quick break. We'll be right back with more from Powell Kodakia. You're listening to How I Built This Lab. Hey, welcome back. All right. So the book describes ultimately it lands on this goal setting method that you've used and created for both your professional and personal goals. Can you describe how it works? Yep.

So I'll also give you the background a little bit on how I came up with it because for me, and this was, was right when class pass took off. So we're talking about, you know, end of 2013. It's the holidays. And I felt that my personal life was in shambles. My health was bad. I just felt like, you know, most of the things in my relationships, my friendships, they just weren't in the place that I wanted to. And look, I never believed in the word balance and I don't think you can have it. But I knew I needed a system that the same way I was able to accomplish every dream I had professionally, I didn't. understand why I didn't have that system personally. And on the flip side, I think for other people, they can do everything in their personal life, but they need help professionally. So it works really both ways. And the way I start the method and in the way, you know, for me, it really has always

started with everything I've done is reflecting. So the first step is to really think back on the last year of your life and think about the words that have been top of mind for it. And so this is anchoring you in what your thoughts are, what your emotions are. Where are you still? starting from because we can't figure out where we're going to go unless we really take a second to check in on where we've been. So the first step is all about getting in touch with that and you're having your reflect words. The second step is doing the same thing but in the future. So thinking about a year from now, what words do you want to say really symbolized this coming year? So we're not setting annual resolutions. We're setting dream words, right? Words that we want to embody for the

coming year. And these are just ways to anchor you, right? Because so much of the time we want to write down, like, I'm going to buy a new house, I'm going to run a marathon. And we forget to think about what happiness feels like to us. And by the way, I've been doing this for seven years. And every year, those dream words for me are different because we are, we change, right? We learn from where we've been and we want different things. And we never really give ourselves a way to aim for something. So that's step one and step two. Step three is all about focusing. So once again, I don't believe you can make impact in every area of your life. And I also don't really believe in annual resolutions.

So the focus period of what I do is always a quarterly system. So you set three to five areas of your life that you end up choosing to focus on for only the next three months. Right. So this is something actually a lot of companies do. Right. We have OKRs. And it is something that we don't do in our personalize, right? We always say we have annual resolutions that no one does.

Right. Right. Three months is actually a really great way to make progress on something. and then also not get stuck for an entire year. So that's really step three. And then step four is actually when we goal set. So really what I do in the first three steps is set you up to goal set right. Because usually we goal set without thinking about the first three steps, which are honestly

the most important anchors to being able to set goals that you're going to be motivated to do, that you feel that you feel that are aligned to where you really want to go and that you honestly have chosen, right, versus feeling like it's some to do list that someone. gave to you or is based on society's expectations. And that's usually where goals go wrong. You know, we're in this moment now where lots of people have been leaving their jobs and choosing to take time off and then maybe try something new. For somebody who is thinking about wanting to make a change, but still a little nervous, how would you advise them? How could they, how should they be thinking about the life pass method with respect to their own journey and

whether to take that leap? Right. So, you know, let's assume that they went through steps one through three and, you know, we're on a goal setting part to wanting to explore and try new things. Because honestly, I do think it's trying new things. And for those of you who remember, like for me even to start class pass, it took me to travel to San Francisco. Yes.

To really come up with the idea. And honestly, I was not somebody at that time of my life who traveled off. because I wanted to work and dance and I didn't have money to spend on anything else and I didn't have time. But I did. I went into this new thing and it obviously changed the course of my life by meeting entrepreneurs. So, you know, I think it's so important to make a list of what new environments could you be in, right? You know, are there different friends you want to see? Are there some new classes you want to sign up for? And it's, you know, I think with trying classes everyone always gets really stuck with. You don't need to be an expert by the end of the three months. It's literally, maybe you go to three classes. or even one, right? That's still progress than letting a whole year go by and saying, I wanted to try tennis and never going at all, right? So I really encourage just setting up a plan to say, I'm going to try a new class or a new activity that really might interest you.

And then I think one of the last parts of this is actually clearing the noise. We forget that so much of our life is being led by a lot of shoulds for people instead of our bus. Yeah. And that is honestly the biggest trapping where we never even get to hear what that purpose and calling is. So we kind of get stuck in even you could be trying new things. You could be doing all these things. But if you're not willing to listen to what that purpose is, and that's, I really believe it's already inside you, right?

I think I was destined to build class fast and knew that when I was probably three years old and I started dancing, right? It was one of those things for me that was so a part of who I was in my being. Usually our purpose and calling is very tied to that. So you should honestly schedule the time, whether you have to journal, you need to meditate, you need the silence. It also counterbalances the trying new things and the exploring. You talk a lot about the importance of identity. Yes. In the book, one point you write, after splitting my identity for so long, I never want it to be boxed in again.

I'm a dancer and I'm a business person. I'm short and I'm powerful. I'm Indian and I'm American and so on. How did splitting your identity keep you from fulfilling your potential or being your sort of authentic self? I mean, when you split yourself up, you're never your full self, right? You are a version of you and only a small part. And I remember, especially when I was younger, I mean, there was the Indian girl who would go to these festivals. And, you know, I was obviously a dancer and I loved my culture.

and then I would run home and I was a cheerleader in my school and it was just a total different identity. I mean, I was living two lives and this happened to me again in my life when, you know, I was at Warner Music Group sitting there at my desk and here I was in the evenings and the weekends living this artist's life. And I was a great performer with huge accolades. And then I would go back and be, you know, an analyst at my desk, crunching numbers during the day. And I think I knew that in any one of those settings, I wasn't giving myself the full chance to really shine and to really go after my dreams. And I think it really took me to that point to rip that band-aid to be at a point where all the different parts of me, even the parts I may have been hiding in one area or another, were all the parts that built class pass, right? It was the dancer. It was the business person.

It was the Indian American girl who had, you know, had different experiences. really of different types of people that brought me together to really build and solve this problem. And I think it's so important that we've realized that is that when we actually are our full selves, we can live our purpose truly. We can go and tackle something with clarity of mind instead of questioning who we are. That's Powell Kadaki, a founder of Class Pass and author of the new book, Life Pass. Paul, thanks so much for coming back on the show. Thanks for having me again, Guy. Hey, thanks so much for listening to How I Built This Lab.

Please do follow us on your podcast app so you always have the latest episode downloaded. If you want to follow us on Twitter, our account is at How I Built This and mine is at Guy Raz. And on Instagram, I'm at guy.orgia. If you want to contact the team, our email address is hibt at ID.wondery.com. This episode was produced by Chris Messini with editing by John Isabella. Our audio engineer was Neil Rouch. Our music was composed by Routin Arablui. Our production team at How I Built This includes Alex Chung, Carla Estevez, Casey Herman, J.C. Howard, Liz Metzger, Sam Paulson, Carrie Thompson, Catherine Seifer, Josh Lash, and Elaine Coates.

Neva Grant is our supervising editor. Beth Donovan is our executive producer. I'm Guy Raz, and you've been listening to How I Built This.