The founder and CEO of ClassPass is swapping roles with an investor who helped build the company
ClassPass founder Payal Kadakia is stepping down from her role as CEO.
The 34-year-old founder is swapping roles with executive chairman Fritz Lanman, who will now be taking the helm of the New York-based fitness startup as Kadakia transitions into the executive chairman role.
"Fritz and I have really been partners for I would say three years, since the company had four employees," Kadakia told Business Insider.
"He really led our Seed round, led our Series A, has been really involved in a lot of the big decisions for the company. I started focusing more personally on the things I would say are closer to my heart as officially the founder. I think at that point, Fritz and I, earlier this year, talked about it a bit more and made it more official," Kadakia said.
The change at the top comes as the company has shaken up its organization and its business model.
Rumors have been swirling since last July that Kadakia was stepping away from the CEO role. Lanman began to spend more time at ClassPass about a year ago and told Business Insider last year that he and Kadakia were "co-operating" the company. The new title change, Lanman says, is meant to reflect how their roles have "organically evolved."
"In 2017, we have so much new, innovative stuff coming down the pipeline - new products, new features - that Payal really wanted to start focusing on that," Lanman told Business Insider. "It felt like such an obvious thing to do."
The company now plans to provide more offerings than boutique fitness, embracing digital ways of working out like video fitness classes, expanding into outdoor sports and running, and increasing the number of gyms available on the platform.
ClassPass has also added a social component to its platform, provides recommendations for classes you might like based on what you've done in the past, and is in the midst of rolling out a feature called Plus, which lets customers go to a studio more than a few times per month. In the past, the company had a monthly limit to how much you could go to one studio.
The change provoked an outcry from many members, who felt that the company was throwing its most loyal customers under the bus.
But Lanman said that ClassPass lost less than 5% of its unlimited customers after doing away with that plan and instead, has seen a bump in its subscribers. The first quarter of 2017 will be the biggest quarter of growth the company's ever had in terms of new subscriber additions, Lanman said.
Business Insider reported last September that ClassPass had reached an annualized $150 million revenue run rate and that ClassPass's gross profit margin was close to 17%, up from a negative gross margin in 2015. At the time, the company was not profitable on a net basis.
ClassPass was last valued around $400 million in 2015 and, according to venture capital database PitchBook, has raised more than $95 million to date. ClassPass declined to provide its current valuation.