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in each class. “We did not want to cannibalize the studios’ loyal traffic,” Kadakia said. “We only wanted to sell their excess capacity.” Because they already had high utilization rates and didn’t see the benefit of the lead generation the Passport offered, some of the city’s trendiest studios, such as SoulCycle and Flywheel, did not sign on. On the other side of marketplace, Classtivity marketed the Passport to users as a way to dabble in new hobbies and explore venues around the city. “It can be intimidating to show up for a class at a studio you’ve never been to before,” Kadakia said at the time. “With the Passport, we hope to make this hurdle less daunting and make it easier for consumers to find the best classes in their city.”48 In order to track users’ satisfaction with the quality of the classes they were attending, users were asked to rate each class on a five-star scale. Because it was designed to be a discovery platform, users could only purchase the Passport once and use it within a 30-day window. After that, Classtivity planned to offer them discounted rates on classes and studio packages sold through the website, while collecting transaction fees. Instead of spending many months building the technology behind the product, as they had with the booking site, Kadakia hired a team in the Philippines to process each reservation manually. “I didn’t think it was worth it to invest in technology before we had better product-market fit,” Kadakia said. The product immediately captured consumer attention. “Even though the search engine had been around for six months, we got more engagement with the Passport in the first three or four days than we had with Classtivity in those six months,” Sanghavi said. However, sales were lackluster until the team made the unusual decision to reduce the number of classes users could attend from 20 to 10 while maintaining the $49 price point. Following that change, sales improved. “I realized customers were not going buy the product if they didn’t think they would actually use it in its entirety,” Kadakia said. “With fitness, there is this psychological barrier around how much people feel they can work out.” The team tried several strategies for advertising the Passport, including influencer marketing, email blasts, and networking with members of the press. They also advertised the product on Gilt, a luxury products discount site, where they sold a $49 Passport valid for 20 classes within 30 days and a $99 Passport for 20 classes within 90 days.49 In addition, Classtivity advertised on Pandora, an online music streaming service, and Lifebooker, a daily deal site. On average, the cost of acquiring a new customer was $20. For three months, Kadakia tracked reservation and usage data, as well as users’ class ratings and reviews. She read each customer service email Classtivity received. “It definitely is a great way to sample classes I may have not taken otherwise,” one customer said. “It’s an economical way of trying out some of the pricier studios to see if they are worth investing in.” The product also generated a lot of buzz in the press and on Twitter. “I took classes that I had already heard great things about without the hefty price tag,” wrote one reviewer. “It forced me to take classes I didn’t know much about and take a chance on something new.”50 Kadakia commented, “We were introducing a lot of new people to fitness. We were marketing to a whole new demographic of people.” Kadakia included herself in that demographic. “I was scared of these high-intensity workouts before the Passport,” she said. “I never thought I could do suspension training or core strength training.” Bookings and revenue began to grow quickly. By April, Passport had generated more than 8,000 bookings on the site, and more than $50,000 in revenue (Exhibit 3). On average, Classtivity found that Passport users actually attended class an average of 5.5 times in that month, even though they had access to 10 classes.