ClassPass

“We're a full-on club management system for tennis and sports clubs, where you manage space bookings, lessons in clinics, coaches so it's a completely different product on the backend side compared to ClassPass.”

“And in your company's early days, I'd argue it's more important to get users in the door, even when you're taking a very steep loss. But when you ultimately need to change the price, They'll grumble for sure. A few might storm out, but if you brought enough of…”

“That still is part of the core of what made ClassPass everything it is, is that people loved variety, and no one realized that. There was this market out there for dabblers when everyone was trying to push everyone to be, like, complete loyalists”

“And we also started getting people who were sometimes churning saying, oh, I only went to eight. And I'm like, this is so interesting that people were, like, tying themselves to this number.”

“And then we announced our Series A, our total million dollar round, and it was a great moment, and always in hindsight, I'm like, I don't know if I would have done that, because what it did is it spurred competition in every market.”

“If you pilot an idea and everyone copies it, it's a good indication that you're on to something. But it also means two things. One, if you don't lean all the way into that idea, your users might drop you for the five, 10, 20 similar products that have popped u…”

“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 comf…”

“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”

“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.”

“I mean, the first product we built, we spent half a million dollars building it, a year in the making.”

“Over time, and I still always make this the most important number that my team sees, it's the reservation number, because that is the heartbeat of the company. That means our product is working. That means our partners are happy. That means our customers are e…”

“And there were a lot of fitness products in the market, That were actually speaking to the one percent of people who already did fitness, and I realized I wanted to go and talk to the 99% of people who were like me, and who were scared to walk into a spin clas…”

“And so one of the things we did, and we figured this out early on, is we gave away Lululemon gift cards for anyone who joined and stayed for six months. So we said, hey, this is a 99 dollar product, you get a hundred dollar gift card if you stay for six months…”

“Mandated by the government, almost every studio was shut down, right, within two weeks of COVID starting. So that was like a 95% drop in revenue. It was just a shutdown completely”

“I raised about a half a million dollars. This was before we got into Techstars, which was this big incubator.”

“We actually had to change our name because there was a company in Chicago that started selling classes under, under the name of Dabble. So we had to actually overnight change our name and we couldn't think of anything, so we, like, literally were just scouring…”

“And so something with like airline tickets, like you already made the decision to go, or if you're going to go eat, you're going to eat. Eating is, is a utility. Like you're going to eat. Right. And that was the difference where working out and going to these …”

“We saw less than 10 to 15% of people go back to studios.”

“So we did a survey with our users where we asked them, you know, if you could go back and do this product over and over again, use the passport month over month and visit your favorite studios, you know, would you do it? And 95% of them said, yes, I would.”

“We had a total of about 2000 customers on the passport before we pivoted to ClassPass”

“By month three of having the class pass out, we, it took over the passport revenue, and we knew that that was the model to focus on.”

“There were certain studios that we just put on the platform where we didn't have like full agreements with yet. Because we just wanted to test and, you know, we started sending them so much traffic that they would call us up and say, Hey, like, who are you guy…”

“And so I thankfully, you know, raised a bridge round from, actually Cyrus from ZocDoc helped me Raise that round, which got me into, got me through to January, which is when I officially closed my seed round that was going to let us launch in other places.”

“And one day I get to the office, and there's like a letter on my desk, and I open it, and it's a cease and desist from Lululemon.”

“We were seeing our average around, you know, five or six classes per customer.”

“Six months after my series A, I raised a forty million dollar series B, right?”

“By January first of 2015, we were in 20 markets around the U.S.”

“The way we were doing a lot of the discounting was it was a 50% off of their 10 class pack rate.”

“When we started doing was introducing lower, lower packages. And then what happened was, you know, our really profitable users were obviously choosing the lower packs, which made the unlimited package even get worse in terms of our margin. Right. And the peopl…”

“I've learned this, you know, to be mission obsessed as a founder and not product obsessed. It's not my product that makes us, it's us actually creating a solution right to the problem.”

“The noise was bigger than the impact it had on the business, for sure.”

“The synergies, right, of a company like ClassPass being able to do customer acquisition for an entire industry, right, where a class is, you know, 25, 30 dollars is just obviously more efficient when we're selling a product that has a bigger lifetime, right? W…”

“Our teachers are our product, right? I always say this. It's not, you know, our product is not this technology we built. Our product is this class that someone goes to, right? Offline. It's the experience they have with our instructors in our studios”

“So overnight in almost, you know, close to, I would say, 95% of our markets most of our studios closed down.”

“And we got a billion dollar valuation in January, which is incredible.”

“From a business perspective, what gets really interesting about this whole credit model, and I'm still shocked that more marketplaces and subscription businesses haven't adopted it, and I give ClassPass a lot of credit for pioneering the way, is what it allows…”

“To date, David has backed hundreds of startups, including the likes of, check this out, Uber, SendGrid, Twilio, ClassPass, PillPack, and many more. In total, these investments have gone on to create more than eighty billion dollars in value”

“And this industry always says we shouldn't celebrate financings, and I say bullshit to that. The reason is that a financing is a lagging indicator of whatever you've done over the last six, 1218 months, and so it's a reflection that you did something good, tha…”

“We found that it works in any zip code that has five studios in it.”

“But we landed up not investing in the seed round and watching the company for about a year.”