Here's why employees at $400 million ClassPass, a startup that investors and gym rats love, wear workout clothes to the office

ClassPass is one of the hottest startups in New York. It's two years old and is worth about $400 million, according to CEO Payal Kadakia.

ClassPass sells a $99 per month membership program that lets users pay a flat monthly fee to take fitness classes at a diverse group of studios and gyms, from widely known ones like Barry's Bootcamp and Flywheel to boutique shops offering barre, yoga, pilates, and more.

In an interview on Rent the Runway's website, CEO Payal Kadakia says there's something very on-brand about the dress code at ClassPass: her employees wear workout clothes in the office, which makes sense, since they take workout classes together. She says letting her employees blend work with their personal lives by letting them wear workout clothes makes them more productive.

In her interview Kadakia says:

"If you feel good, it doesn't matter what you're wearing. I want our staff to be able to feel like themselves. It also makes it easy to get to class and come back, which is part of our culture. We're constantly connected to our jobs, and everyone in the company has a huge sense of responsibility-so I think it's important to remove yourself when you need to, and sometimes that's in the middle of the day. Allowing our staff to mix their life with work only makes them more productive and in love with the work that they're doing."

ClassPass is in more than 30 US cities, and it is expanding internationally with 4,000 partnering studios around the world.

Users love it because the price point is a steal when you consider that a single spin class at Flywheel costs $30 a pop. Take three or four classes per month and your membership pays for itself.

ClassPass has a subscription model, which retains users and gets them to try new studios routinely. On average, the company says, a ClassPass user will go to 10 new studios within three months while using the platform. Kadakia says it has a 95% studio retention rate.

In May, ClassPass says it had paid out $30 million in revenue to studios since its relaunch in June 2013. In 2015, the company plans to pay out $100 million. ClassPass has booked 4.5 million gym studio reservations since June 2013.

Before ClassPass existed, Kadakia, a world-class dancer, founded a company called Classtivity, a SaaS solution for gym studios to use for registration. But Classtivity never caught on with studios. Kadakia said onstage that she heard "crickets" when pitching Classtivity.

"Failure is an amazing data point that tells you which direction not to go," Kadakia said onstage at TechCrunch Disrupt NY this spring.