ClassPass, the most recently valued $ 1 billion subscription fitness marketplace, today announced that it has been acquired by Mindbody.
Mindbody is a lot like the OpenTable of the fitness world. Its booking software is used by studios, gyms and other experience-based service providers – the company recently signed a global deal with Blo blowdry bar, for example – for clients and organizations to book appointments. you, run, etc.
ClassPass helps fill out classes, while Mindbody provides the software that helps fitness centers run their business.
Terms of the deal were not disclosed, but Mindbody CEO Josh McCarter said it was an all-stock deal. Along with the acquisition, Mindbody also announces that it has secured a $ 500 million investment for the merged entity led by Sixth Street.
ClassPass was launched in 2012 with a model similar to the current Mindbody model. The founder and CEO at the time, Payal Kadakia, devised a site that would allow you to book pay-per-view classes at a variety of studios and gyms. It turned out that people weren’t as motivated as she expected.
Through a series of iterations, ClassPass moved to a subscription model, allowing users to pay a monthly subscription that would allow them to access a number of classes in a range of fitness genres.
Over time, high usage customers have been subsidized by low usage customers. Meanwhile, studios and gyms with their different classes and instructors were all treated the same whether it was a class with a popular instructor or during peak hours.
This led ClassPass to introduce virtual currency and variable pricing. This allowed studios to price their courses based on a handful of factors and ensure that customers paid for exactly what they were using.
Once the company found that foundation, it set off for growth. A huge international expansion began alongside a massive fundraiser led by Temasek. The biggest hurdle since then has been the pandemic, which hit gyms and fitness studios particularly hard.
But McCarter and ClassPass CEO Fritz Lanman told TechCrunch that all of their data points to a huge pent-up demand for in-person fitness classes and experiences.
By combining strengths, the Mindbody / ClassPass entity has the opportunity for tremendous growth. ClassPass studios that don’t use booking software – Lanman says that’s about a third of studios on ClassPass – will now have the option to register with Mindbody.
Mindbody’s consumer-oriented business will have the opportunity to double their experience by signing up for a ClassPass membership and accessing these studios. And, of course, gyms and studios that use Mindbody for a la carte reservations could also be sold to ClassPass.
Lanman and McCarter stressed that gyms and studios in the ClassPass network will not be required to use Mindbody, and vice versa.
“This is because we believe it is essential that ClassPass retain its advantage of having so much inventory available in a particular market,” said McCarter. “This means they have to work with companies that potentially use some of our competitor’s software. “
In other words, there will be no forced migration for a business from one software platform to another, and the same will be true on the client side of the business.
ClassPass will retain its brand and Lanman told TechCrunch that there are no layoffs or layoffs planned.
Lanman likened the deal to the Facebook / Instagram merger at the time.
“Look at Instagram and Facebook,” Lanman said. “Instagram was just a small business when Facebook bought it, and Facebook really gave it a boost using their scale and superior services. “
The key, according to Lanman and McCarter, is to fight your way through the end of the pandemic with so many studios, gyms and service providers in tact.
“We are fortunate that most of our clients are vaccinated,” Lanman said. But, people definitely don’t want to work on face masks, and there are still massive mandates in some places. And so, the main complexity of business risk and execution is how many of these small businesses we can keep going. And how long can they last? But we are seeing some really encouraging signs of resilience in the industry so far. “