ClassPass doing things that don't scale

In the world of startups, there’s a well-known piece of advice from Y Combinator’s Paul Graham: “Do things that don’t scale.” This counterintuitive approach has been the secret behind many successful companies, and ClassPass, the fitness subscription service that revolutionized how people access workout classes, is a perfect example of this philosophy in action. Founded by Payal Kadakia, ClassPass grew from a simple idea to a billion-dollar company by initially embracing manual processes that would never work at scale but provided invaluable insights that shaped the company’s future.

The Spark of Inspiration

In 2011, Payal Kadakia, a lifelong dancer with a passion for fitness, found herself frustrated while searching online for a ballet class in New York City. What should have been a simple task turned into a two-hour ordeal of navigating clunky websites, outdated schedules, and confusing booking systems. This frustrating experience sparked an idea: what if there was a single platform that made it easy to discover and book fitness classes?

Kadakia, who was working at Warner Music Group at the time, decided to pursue this idea. With her MIT education in operations research and economics, she had the analytical skills to build a business. But rather than immediately diving into complex technology development, she took a more pragmatic approach that would allow her to test her concept quickly and learn directly from users.

The First Iteration: Classivity

The initial version of what would eventually become ClassPass was called Classivity. Launched in 2012 after Kadakia went through NYC’s TechStars startup incubator program, Classivity was essentially a search engine for fitness classes. While the platform allowed users to discover classes, it didn’t solve the booking problem that had initially frustrated Kadakia. The search engine model wasn’t driving engagement or repeat usage, and Kadakia knew she needed to pivot.

The Passport Pivot

The team’s first pivot was to a model called Passport, which offered users a one-month trial of 10 different fitness studios for $49. This approach showed promise, but there was a fundamental flaw: once users had sampled the 10 studios, they typically chose one they liked and became a customer of that studio directly, abandoning the Passport platform. The business wasn’t retaining users.

The Manual MVP: Doing Things That Don’t Scale

It was during this challenging period that Kadakia made a crucial decision that exemplifies the “do things that don’t scale” philosophy. Instead of investing more resources into building sophisticated technology for a product that might not resonate with customers, she decided to test a new concept with a minimal viable product (MVP) that relied heavily on manual processes.

“One of my favorite things about this time is that I didn’t let technology drive or hinder my product development,” Kadakia has said. “We started building the product to do what it needed to for the customer. Most of the stuff on the backend was either done manually or didn’t work.”

When a user would make a class reservation through the platform, Kadakia would receive an email notification. Instead of having an automated system process the reservation, she would personally go and make the reservation manually. This approach might seem inefficient and unsustainable—and it certainly was—but it served a critical purpose: it allowed Kadakia to understand exactly what motivated people to make reservations and, more importantly, what made them actually attend classes.

“Instead of building out the perfect booking system, what I needed to figure out at this point was what was going to motivate people to make a reservation and then go to class,” Kadakia explained. “The rest simply didn’t matter.”

Learning Through Manual Labor

By taking on the reservation process manually, Kadakia gained insights that would have been impossible to obtain through market research or focus groups. She experienced firsthand the patterns of user behavior, the pain points in the reservation process, and the factors that influenced attendance.

“That’ll happen if you’re doing the equivalent of sending confirmation emails for every customer,” Kadakia noted. “It helped me realize that technology is crucial, obviously. But it’s still just a tool to get your solution into the world. Your software is not your answer in and of itself. Your insights into customers are your solution.”

One particularly valuable insight came from observing cancellation patterns. Kadakia noticed that approximately half of all cancellations occurred within 15 minutes of booking. This observation directly informed the design of ClassPass’s cancellation policies, creating a better user experience and reducing no-shows.

“Those many days I spent inputting reservations manually turned into another valuable stream of customer insights,” Kadakia reflected. “I quickly learned not to book reservations right away, as half of cancellations came within 15 minutes of booking. That became an important part of the design of our cancellation policies.”

The Birth of ClassPass

Armed with these insights, Kadakia and her team launched ClassPass in 2013 with a subscription model that allowed users unlimited access to fitness classes for a monthly fee. The model was a hit, addressing the core problems Kadakia had identified through her manual work: discovery, variety, and commitment.

The unlimited model proved too generous, however, and the company had to pivot again to a credit-based system to ensure sustainability. Each pivot was informed by the deep understanding of user behavior that Kadakia had gained through her hands-on approach in the early days.

Scaling Beyond Manual Processes

As ClassPass grew, the manual reservation process was replaced with automated systems. The company expanded beyond New York to cities across the United States and eventually internationally. By 2020, ClassPass had raised a Series E funding round that valued the company at over $1 billion, officially achieving “unicorn” status.

In 2021, ClassPass was acquired by Mindbody, a wellness technology platform, in a deal reportedly worth around $500 million. While the acquisition price was lower than the company’s previous valuation, it represented a successful exit for a company that began with a founder manually processing reservations.

The Legacy of Manual Processes

The ClassPass story demonstrates the power of starting with manual processes to gain deep customer insights before scaling with technology. By personally handling reservations, Kadakia was able to:

1. Understand user behavior patterns that informed product design
2. Identify pain points in the reservation process
3. Develop effective cancellation policies based on real user data
4. Build a product that truly addressed customer needs

This approach embodies the “do things that don’t scale” philosophy perfectly. While manually processing reservations was never going to be sustainable for a company with millions of users, it provided the foundation of knowledge upon which a scalable business could be built.

Lessons for Entrepreneurs

The ClassPass journey offers several valuable lessons for entrepreneurs:

1. Technology is a tool, not the solution: Focus on solving the customer’s problem first, even if your initial solution isn’t technologically sophisticated.
2. Embrace manual work early on: Doing things manually gives you insights that automated systems can’t provide.
3. Be willing to pivot: ClassPass went through multiple iterations before finding its successful model.
4. Let customer insights drive product development: The most valuable product features often come from understanding real user behavior.

Payal Kadakia’s willingness to do the unglamorous work of manually processing reservations in the early days of ClassPass exemplifies the kind of founder determination that often separates successful startups from failed ones. By embracing processes that wouldn’t scale, she built a company that ultimately did scale—to a billion-dollar valuation and millions of users worldwide.

In the end, ClassPass succeeded not despite its manual beginnings but because of them. The insights gained through those labor-intensive early days informed every aspect of the product that would eventually disrupt the fitness industry and change how millions of people experience fitness classes.