Live From HIBT Summit: Payal Kadakia, Tristan Walker, and Perry Chen on Innovation

Our second episode from the 2021 How I Built This Virtual Summit is from our innovation panel with Payal Kadakia of ClassPass, Tristan Walker of Walker and Company, and Perry Chen of Kickstarter. In this live conversation with Guy, the panel talks about how innovation doesn't require newness, but rather, authenticity. We'll be releasing more episodes from the Summit, so keep checking your podcast feed. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

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• 0:46Guy Raz?

  build the prototype, analyze the market, maybe even come up with the idea, what separates the people who actually build something from everyone else? I don't have a clean answer yet, so I've been sitting with it with Claude. There's hope in hard questions. Ask yours at claude.ai/hibt. We get support from U.S. Bank. A question I love asking founders. What's the one decision you almost didn't make? The one that changed everything? Because it's never the obvious stuff. It's never, I decided to start a company. It's the small, boring, Tuesday afternoon decision you barely remember making until you realize it's the reason everything after it either worked or didn't.

• 1:32Guy Raz?

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• 4:23Guy Raz?

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• 5:07Guy Raz?

  Visit mobili fuels.com for details. Hey, everyone. It's Guy here. Welcome to a very special edition of How I Built This. So you might have heard that back in May, we held our first-ever live virtual How I Built This Summit. Most of the time, we do it in person, but for obvious reasons, we had to go virtual this year. But still, more than 3,000 people from around the world attended. And this summer, we're releasing some of our conversations from the summit here on the podcast. Today, we've got one of those conversations. It was a panel discussion on innovation with three incredible founders, all of whom have been on How I Built This in the past. So you're going to hear from Pao Kadakia of ClassPass, Tristan Walker of Walker & Company,

• 5:52Guy Raz?

  and Perry Chen of Kickstarter. We started off by talking about how each of them came to their ideas. And before Perry Chen launched Kickstarter, he actually had no intention of starting a business.

• 6:05Speaker 01

  I wasn't coming from entrepreneurship, and I wasn't working in business at all. I was DJing and working on electronic music. And I had this idea, and it wasn't in my field. It's just an idea. And so you assume, there's probably something wrong here. And it's the kind of problem that comes up a lot, like funding. So every project I'd have, I'd be like, where could I get money for this? So every time it would come up, it would be like, well, why doesn't this- Thing exist.

• 6:31Guy Raz?

  Yeah.

• 6:31Speaker 01

  And I'm usually pretty good with those things and like, you know, in a couple of days it will come to me and I'll be like, ah, of course. And that just never happened. And so I just never let go in a way, or it never let go of me. I kept feeling like this should exist. I think that's kind of maybe the best way to say it. This should exist.

• 6:50Guy Raz?

  Yeah.

• 6:51Speaker 01

  And maybe Tristan, maybe that's what you were feeling as well with your project. And at a certain point, you kind of just feel like, well, maybe I need to make this happen for this to exist.

• 7:01Speaker 02

  I felt disrespected and I felt we all deserved to be respected, not only as people, but also as consumers. So what should exist? Respect. For me, it was respect in my retail experience when I walked down the aisle. It was respect to, you know, have efficacious products that do what you say they're going to do. It's respect in terms of how we kind of build a company and a brand and the people that are employed within it. Uh, so for me, you know, it started as a frustration. I felt disrespected. And the result of those two things made me recognize the should in it. And we went right after it.

• 7:37Guy Raz?

  I, I think that's a really important point Tristan, because we don't often talk about anger or frustration. Well, frustration we talk about, but about anger or feeling disrespected as an engine for creativity, as an engine for innovation. It can actually be a hugely powerful catalyst.

• 7:55Speaker 02

  That's right.

• 7:56Speaker 03

  Isn't, isn't that what founders do? I mean, our job is to solve problems, right? It's, I always think about that. Like, it's the first question I ask an entrepreneur when they're telling me about their product. I'm like, what problem in the world are you solving? Right? Because that's usually, that means that there's not a solution that exists today. And there needs to be a new blueprint for it.

• 8:17Guy Raz?

  Yeah.

• 8:17Speaker 01

  Yeah, I think there's the scratch your own itch thing, right? And, and everybody on the panel today is talking about having started something that, that addresses a problem that, that they were facing right in front of them. And, and that versus the, what do tweens want right now is definitely the way to go. And it's, it's, you know, you're so much more likely to be successful if you're solving a problem that, that you have. So you know when, when you're really solving it. You don't have to focus group it.

• 8:42Guy Raz?

  Paul, I want to, I want to ask you about the inspiration, one of the inspirations behind ClassPass. Remember in the podcast, you talked about being inspired by brands like OpenTable and Zocdoc, which is a platform that connects patients to doctors. And your innovation was essentially taking a version of that concept and applying it to health and fitness, right?

• 9:03Speaker 03

  Yep. So, you know, ClassPass started because of my passion for dance, right? And I was always going to classes. I was always finding a way in my busy schedule. Like most people, I had a job that I felt like I was responsible to take after college and I had to kind of go and do the normal thing. But I wanted to keep dancing. So I was that person who was always looking for classes, you know, to fit between my lunch break or fit after work. And one day for me, I hit that moment where I realized that technology could really solve this. And I was really inspired by companies that had sort of already done this offline to online model, right? So things like Zocdoc, OpenTable,

• 9:45Speaker 03

  Seamless Web. And this was 10 years ago, so I feel like there's so many more now, obviously, in the breadth of this. But at the time, I remember looking at those companies and realizing that, hey, why couldn't I do this for the class space? You know, it's a very similar model where people need to go and do something. It was inefficient. People need to book appointments. And if we could solve this via technology, I quickly thought that because this worked in another industry, it would work in mine. But I was very easily proven wrong.

• 10:15Guy Raz?

  You know, I remember, Perry, I remember one of the things that was unusual, certainly when you started out, was, given that Kickstarter is essentially a technology company, it took you a long time. I mean, comparatively, a long time to stand it up. And I remember you describing like almost three years to get it up and running. And there were moments where you weren't sure whether it was going to work. And, you know, just this long, long slog. And I remember you told me during that time, you and your co-founders made every mistake in the book. Tell me about some of those mistakes that you made and what, you know, what did you learn from those mistakes?

• 10:54Speaker 01

  I had never worked at a company, period. I was working, living a musician's lifestyle in New Orleans. And so I didn't know anybody at all, period, to talk to. So I spent so much time, you know, kind of in a vacuum on my own, conceptualizing it, that by the time I was able to find people that could help program it and do things like that, it had been incubating in my brain for so long. So long that the web had changed to where the initial idea happened. It was before YouTube. So I was like, I didn't even think, I was like, there wouldn't be a video there. It would be just an image. By the time we actually got, years later, so we're actually building it, YouTube had happened. I'm like, okay, great. So now it's a video.

• 11:34Speaker 02

  That's amazing. That's amazing.

• 11:38Guy Raz?

  And, and, and, and Pao, I mean, it took you, like Perry, a few years to get the product right, but, but, and to make, well, to make the business model work. But unlike Perry, I mean, you were iterating this in real time while customers were actually using your product. So you were testing it out. It wasn't quite right. You would go through several iterations, but you were learning what wasn't working in real time, right?

• 12:02Speaker 03

  Yeah, I mean, actually Perry, when you were speaking about your starting journey, I feel like that was the exact thing that happened to us. I mean, the first product we built, we spent half a million dollars building it. A year in the making, we actually got it to this huge incubator. So we thought it was going to work. And I always think back to even like the mistakes we made. And one of the things I was, now I'm so wary of is something I call like false signals of success, which are things like you can have funding or press or followers and that still does not mean anyone is going to use your product. And I think like, for me, when I think about that moment when we launched and no one went to class, I think that was really heartbreaking. But I think back to what Guy was just talking about, since it took me

• 12:46Speaker 03

  three years to sort of get one booking on the platform, I think once I earned that relationship and that right with my customer, I kind of started realizing like I could test with that, you know? And I think it, because I had failed for those three years before it started working, I think it made me more resilient to test things once it was actually right. So yeah, we changed from having different plans to going to a credit model. Launching new products like video and even new categories in the past five years. I think it just taught us how to be resilient and figure out a way to get back to the mission, back to moving forward and not changing what we're doing every day. But I think failure is hard and I think a lot of people stop in that moment.

• 13:29Speaker 03

  But for us, it was more about improving the model to get to a better place for our customers, our partners and our business ultimately, because it doesn't work if one side is benefiting at the benefit of the other.

• 13:42Guy Raz?

  You know, sticking with this idea of small tweaks and tweaks and tweaks. Tristan, I always think about how you, it wasn't only that you were taking an old technology and reviving it, but it was also how you approached the packaging and the design and that you wanted it to be beautiful and that you wanted it to make that whoosh sound like when you open the iPhone box. You wanted it to be, you didn't want to be hidden down on aisle nine at the bottom at the drugstore, but right there next to other high-end products, high-end shaving products. It was, that was the innovation that you were baking into in old technology, right?

• 14:23Speaker 02

  It's, forget the technology, it's the service and the experience, you know?

• 14:28Guy Raz?

  Yeah.

• 14:29Speaker 02

  It was so far removed from what we were used to. First of all, to get a beautiful package, to have a product that works. If you didn't know how to use it, you could hit us up, we'll do a Skype video chat to teach you how to shave. We did things that didn't scale. So for us, it's about the little things. And not only that, like, yes, it was far removed and to the consumer, it felt perfect, but we knew it wasn't perfect. So I think the true innovation that we built into the platform that we were hoping to create was this idea of continuous improvement, in the same way that you think about software, right? Like, so now this, this release to the App Store, right? Nobody had thought about that for hardware.

• 15:09Guy Raz?

  Yeah.

• 15:10Speaker 02

  And, you know, over time, the first five years of the business, yes, we launched that razor, but people don't know, we made continuous multiple improvements of that razor in our manufacturing line. Our trimmer, when we launched, we never had a V2, we always had a V- One point oh one point oh two point oh three. Right. And now we have something that we are uniquely proud of. So I I kind of took what I had learned in the technology companies that I was a part of before, software companies that kind of already had that continuous improvement baked in and thought, how can I bring that to hardware in the analog? And I think that was the the thing that was differentiated in a CPG industry that operates on two year cycles.

• 15:50Speaker 02

  We operated on three to six month cycles. So that innovation continued over and over again and still continues to this day.

• 15:58Guy Raz?

  You know, I'm I'm curious. So this is a question for all of you, but I want to start with you, Pyle, which is as you were, you know, during the process of kind of reimagining and reimagining and iterating and changing the business model and and how did you know that you weren't necessarily losing sight of the vision? And how did you know what it meant to stay on track? Because I'm sure a lot of people watching right now are like, yeah, I I'm not sure if the thing I'm doing is exactly right, but I'm not sure if I should change it too much. I just don't know what what to do. So how did you know?

• 16:35Speaker 03

  Such a great question. And it took me, I wish I knew this answer earlier. It took me three years to figure it out. The thing that mattered the most was getting someone to class. That's all that mattered because that was the mission. That was engagement. That was revenue at the end of the day. It was the leading metric that would tell me how my product was working, if my partners were happy. But I didn't know that in the beginning, right? Because in the beginning, everyone tells you to create a business model and you're looking at revenue, you're looking at profit, you're looking at costs, like you don't know exactly what number to focus on. And over time, and I and I still always make this the most important number that my team sees, it's the reservation number because that is the heartbeat of the company. That means our product is working. That means our partners are happy. That means our customers are engaged and are going to continue to pay us

• 17:19Speaker 03

  the following month if they're going to class, right? So to me, it was about figuring out what that metric is. And it kind of goes back to like that question I was thinking about earlier. Whenever I ask somebody, you know, what problem in the world are you solving? How will you know when you've solved it? Right? So what's the action your customers are going to be taking? So it took me a little bit to figure it out, but for me, it was it was knowing what the metric was.

• 17:41Guy Raz?

  How about you, Perry? When did you, I mean, three years, you scrapped a whole, you know, year of, of work. How did you know that you were on the wrong track? And when did you know that you were on the right track?

• 17:54Speaker 01

  Well, at that point, I was in, my co-founders, we were so in it, you know. I think I said this when, when I was on the show, that at a certain point, it had taken so long and you have these calamitous things happen, like where they're like, the year is gone and then the money spent on that is gone. And also, it's an indictment on you because how could you make such a mistake? That I switched my goal from like, can't wait to create this thing because I think it's going to have really great impact, to I just need to launch this thing so that everybody I know doesn't think I was making up that I was working on this thing.

• 18:34Speaker 01

  But, but to your question, I think it's just that you do have to be deluded when you're in those stages. You, you have to not think about the odds, you know? You have to have just incredible belief that it is worth it. I didn't really have a vision of what that meant, how big or numbers or this or that at all. Just felt this thing, it was worth it. I think a big part of it was because it was something I would want to use and something that a lot of people I knew would want to use. I didn't know what that scaled to. And, and by the time I was that far down the road, like I was so soaked in the belief of it. I just needed to get to where we would just launch it and put it live. That was the goal.

• 19:14Guy Raz?

  Tristan, when you were, and as you continue to innovate and develop, I mean, but certainly in the early, early days of Walker and Company, now you've got a men's product line, women's product lines, and, and obviously product lines for, you know, folks who are non-binary, but for anybody. But how did you deal with uncertainty? The uncertainty of whether a product that you were working on was going to work? Because part of innovation is also dealing with the uncertainty that it could fail.

• 19:47Speaker 01

  You know, it's funny, I was, I was quite certain.

• 19:49Speaker 02

  You know, remember, you get immediate feedback. You use this thing, you either have razor bumps, the next day you're done.

• 19:54Guy Raz?

  Yeah.

• 19:54Speaker 02

  My not getting it the next day was a breakthrough. I, I, it's, it's hard to explain the moment, right? Fifteen years and I only had to use that one product and I did it, it worked. I asked another friend who looked like me to use it and it worked. Eighty percent of us have this issue. Thirty percent of people who don't look like us have this issue. I knew the product was going to work. At the earliest stages, the thing that I was also certain about was I wanted to kind of inspire for the next hundred and fifty years. I wanted to inspire the majority of the world, folks of color, to say, you know, we're looking out for you. What the company was going to end up being in year a hundred and fifty, that's what I was uncertain about. Right?

• 20:38Speaker 02

  And it's funny, I, I, I speak to, you know, a whole bunch of journalists or just people and they're always like, you know, when do you see yourself in five years? And it's always an impossible thing for me to answer. I always say, you know, I know where I'm going to be in twelve months and I know where I'm going to be in a hundred and fifty years. Twelve months is very tactical and the five year plan is just a set of well-executed twelve month plans, right? Uh, so that's how I've tried to manage it. I can only control the next twelve months and I can try to steer the ship, uh, toward the hundred and fifty year true north, but all the stuff that happens in between is really, really messy and I just need to ensure that my team is ready for the messiness.

• 21:13Guy Raz?

  Wh- when it comes to an idea, right? It's, it's, uh, I mean, people say where ideas come from and, and Pyle, you said it earlier, you look for a problem that you have ideally or that other people have and you try and solve it. But, but sometimes, oftentimes, and, and I, and I know this happened with all three of you, you have lots of ideas before you land on the idea that you actually pursue. Tristan, you had an idea for a logistics company. You had an idea, you had a bunch of ideas before you landed on this idea

• 21:44Speaker 02

  Yeah.

• 21:44Guy Raz?

  that you were sure of, that you had this sense of certitude around.

• 21:48Speaker 02

  Yeah.

• 21:49Guy Raz?

  Um, did you need to go through, I mean, I'm assuming you had to have, you had to go through the process of thinking through other businesses you could start and you must have had doubts about whether those would work because you didn't start those.

• 22:01Speaker 02

  Yeah, I wasted a lot of time.

• 22:04Guy Raz?

  It's not a waste of time.

• 22:05Speaker 02

  No, it was a complete waste of time. I had to come to the ultimate conclusion that I had to do the thing that I felt uniquely positioned to do. I think all too often, I speak to a lot of entrepreneurs. Look, there are eight billion people on the planet, each of whom has a unique lived experience. No one has lived my life, right? And for a while, I was almost embarrassed to tap into that lived experience. You know, imagine how much better the world would be if all eight billion people tapped into that lived experience to build the thing that they were uniquely positioned to do. And I try to encourage people to get as quickly as possible to recognizing what that is, and then you can innovate. And the way that that scales, Guy, is to hire people who reflect the, well, at least

• 22:46Speaker 02

  in my case, the diversity of the consumer base that we wanted to serve, but also provide an opportunity and grace and space for those people to be who they are. Now our innovations, plural, can scale.

• 23:00Guy Raz?

  Pyle, you are, I mean, you're like a world-class dancer, and one of your initial ideas was, you did, you started a dance troupe. I mean, that was really where your focus was. You had other ideas before you landed on ClassPass.

• 23:15Speaker 03

  Yeah, so I think for me, I think starting my dance company was one of those entrepreneurial endeavors for me, where, kind of what Tristan was saying, I needed to break free of what I think society wanted me to do, and I needed to just start being creative and being a leader and following something that felt more like me and my calling. And so I think starting my dance company helped me on that path, but I knew that there was like something else that the world was going to need for me. And I think when I hit that problem of looking for the classes that day, I just remember thinking in that moment, even though I didn't necessarily know what the product idea would be, I felt like I was the person who was going to solve this, because I was the one who cared enough to solve it for people.

• 24:00Speaker 03

  I was the girl who was, you know, 25 years old, inviting her entire company to her dance show when no one else was doing that. And it was because I felt like passions were so important to keep in our lives, and I think that was the missing ingredient, and that was the fire for me that I knew was going to help me put together sort of my intellectual side with my creative side. And I think that's really, like, back to what Tristan was saying, like, this moment for me where I was like... I'm going to keep doing this until I figured out. I didn't know what the product was. So as you know, we said like, the company was still class pass. I mean, I changed the name three times and I changed the product probably 50 times. But in a way, it started that day because the mission never changed. Right. And I think back to like, I realized as a founder from day one, I was going to be

• 24:44Speaker 03

  mission obsessed, not product obsessed. Yeah. To me, my product helped serve my mission. And I think that's where innovation comes from. It's not about being sort of tied into a product idea. And honestly, like I, I was, my first product launch, and I remember the day I shut it down. It was a hard conversation to have with my team to say, you know, we're going to go in a different direction. But I knew I wasn't serving anyone, just having a beautiful website out that was serving no one to go to class. Right. So entrepreneurship comes with these really hard decisions that you have to make. But it's these hard decisions that really gets you to the other side. And I think now, like, I'm so used to failing. I'm so used to making these decisions because I also know the North Star of where I'm going.

• 25:28Guy Raz?

  When we come back in just a moment, more of my conversation with Payal Kadakia, Tristan Walker, and Perry Chen, and whether entrepreneurs who want to be innovative actually have to come up with new ideas. Stay with us. I'm Guy Raz, and you're listening to How I Built This from NPR.

• 25:55Guy Raz?

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• 26:32Guy Raz?

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• 27:40Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So as part of the innovation panel at our virtual How I Built This summit back in May, I spoke with Tristan Walker of Walker & Company, Perry Chen of Kickstarter, and Pyle Kadakia of ClassPass. And here's more of that conversation. Perry, I think unlike Tristan and Pyle, I could describe you more as an accidental entrepreneur. Is that fair?

• 28:05Speaker 01

  Yeah, I'll take it.

• 28:06Guy Raz?

  Yeah, right. I mean Tristan and Pyle were going to start businesses. They were thinking of ideas. Something was going to happen. You were a musician. I mean, that was your focus. But this kind of came into your mind because you had to solve this problem for yourself, right? But were you thinking about other business ideas before you came upon Kickstarter?

• 28:29Speaker 01

  No, I mean, I tend to have a lot of ideas. I'm sure everybody who you meet, God does. But they would be everywhere. You know, it'd be like, oh, Doc, that's a documentary film idea. That's a this, that's a that. So, you know, it was all over the place and not typically businesses at all. So I don't really recall any other ones that that really were things that I had kept around as as pet ideas. So you're right. And I think in a way that probably gave me more confidence. Because, you know, this is not something that I gravitate to doing. I'm not, I don't, it's not an idea I had for myself was to start a business. And so in a way, probably I wasn't forcing anything. Like we all have, I've talked to a lot of people that that are starting things, are interested in starting things.

• 29:13Speaker 01

  And those conversations about, is this the right idea? And and I and I've seen that struggle from from the other side of of sitting across from people like that. And I wonder sometimes that, not that people don't ask themselves that question when they go on to have successful businesses, but there is a level of questioning with that sometimes, which leads me to think that this is probably not your idea. Because sometimes the way people are questioning it shows their own lack of belief in it. And sometimes it's a clever idea, you know, but sometimes a clever idea is not, it's not the right idea. And it's hard for people to let go of things that are clever. Because, you know, you can often get patted on the back for a clever idea. And it it works really well in conversation.

• 29:58Speaker 01

  But if you don't have a deep connection to it as the entrepreneur, you just have the connection to the cleverness of it. It's going to be hard to persevere through all the trials and tribulations that you're going to need to go through to to get to the other side.

• 30:12Speaker 02

  I don't think it's accidental at all. You know, I know kind of hindsight's 2020 on it a bit, but this was not my first passion. This was my last passion, you know? You know, Pyle wanted to dance. I wanted to play basketball, right? You know, Perry wanted to DJ. Well, I wanted to DJ too. So we got, I got in it. But but I think we, the the kind of wonderful binding fact about the three of us is that the idea came to us at the right time, at the right moment. And I think that there's a beauty and a purity in that, right? Like, it came authentically and we didn't force ourselves on it. So I don't think it was accidental at all. We just did it at different paces.

• 30:49Guy Raz?

  But you have to do the, you have to do the work of interrogating yourself, interrogating everything around you to come up with the idea. I mean, that's, it's like, you know, mining for a tiny sliver of gold. It could take years to find that bit of gold. You have to, I, I, I mean, you, you said that you wasted time, but you didn't. You had to go through that.

• 31:12Speaker 02

  Well, I think that there's just two things. Number one, you gotta live and keep your eyes open, right? That's number one. And then the only other requirement is to have courage. You know, like Perry was working at restaurants and still making it happen, right? Like, Pile's still dancing, that's awesome, right? Um, you know, you gotta have the courage and you gotta pay attention.

• 31:32Speaker 01

  Yeah, the courage is a great point, you know? And maybe it's the same thing, but I, I, maybe the way I've always thought about it is kind of risk tolerance, I suppose. And that delusion, I think, I think too, which, which I think is common in artists as well. You kind of just like, there's an idea or something, anything where you're conceiving of something that doesn't exist and you have to bring it to life and it's not so easy. There, there is this delusion, you know, that takes over that I think is important in a way to carry you through it.

• 32:02Guy Raz?

  I have a philosophical question for all of you. It's sort of a broad question, which is, how important is it for the idea to be completely new, totally innovative? Or, or can it just be a slight, a slightly elegant tweak as, as I was describing earlier? I mean, if somebody's coming up with something, does it have to be something totally, completely new? Does that even, is that even possible?

• 32:28Speaker 02

  I don't think it's a requirement of tribe building to have newness. Tribe building just requires soul. It requires values alignment. I mean, our innovation existed 100 years ago. I don't think newness matters. In fact, it's like that couple in the Midwest running an HVAC business for their local community that everyone calls on when they need their HVAC fixed.

• 32:56Speaker 03

  Yeah.

• 32:56Speaker 02

  Like, that's tribe building. And you could build something really successfully for that. And I think the thing that matters most is how big do you want it to be? Because not everybody wants it to be that big. And that's a really important nuance that needs to be respected. Newness is not necessary, soul is.

• 33:12Speaker 03

  Yeah, I think it's not necessarily about newness, but it's about having a unique perspective, right? Like, I think there has to be something you're looking to improve, right? Or maybe the world changed and something that worked before isn't working anymore, but you need to add a new perspective to it. Because at the end of the day, you know, and I even think about this with ClassPass a little, like, I'm actually not a fitness person at all. And there were a lot of fitness products in the market that were actually speaking to the 1% of people who already did fitness. And I realized I wanted to go and talk to the 99% of people who are like me and who are scared to walk into a spin class because they didn't know how to clip on their boots. And that was a whole other market. So to me, it was actually about the unique perspective of saying,

• 33:57Speaker 03

  wait, there's a different customer here that actually doesn't know how to approach this market and get into it. And we could massively grow an entire industry if customers would go there. So I think it's really about honing in on to something that is different.

• 34:12Speaker 01

  Yeah, I think it's an interesting question. And the first thing that came to my mind is just, you know, I think it also depends what the entrepreneur wants, you know? I mean, I think certainly we've seen businesses be successful that are just small, small but important changes. Or even the same business, but just in a different market. You're in a different region, you're in a different country. A successful business may not rely on it, but a successful business also relies on the entrepreneur being kind of immersed and enjoying their job through the long slogs as well. So, yeah, I don't know. I think it's two ways of looking at it.

• 34:49Guy Raz?

  One of the things that I know a lot of people, because I've been bouncing around to these networking sessions that we do earlier in the day and hearing people's ideas. And you know, one of the challenges, as you all experienced when you started out, when you put something out into the world that is slightly different, or innovative, or unfamiliar, it's explaining it to people, helping them understand why the world needs this. How are you all able to navigate that? Because that can be really frustrating. I mean, you were repeating the same story hundreds and hundreds and hundreds of times.

• 35:23Speaker 03

  You know, it's interesting from a ClassPass perspective. Like, I realized early on that my best marketing method was going to either be sort of tricking people into using it, or getting their friends to tell them about it. And I realized that early on. And so, one of the things we did, and we figured this out early on, is we gave away Lululemon gift cards for anyone who joined and stayed for six months. So, we said, hey, this is a $99 product. You get a $100 gift card if you stay for six months. Everyone was obviously so excited to get the $100 Lululemon gift card, but what they ended up going on was the journey. And it was actually very hard to explain what ClassPass was, because it was such a real-life thing that people needed to actually use.

• 36:06Speaker 03

  And I couldn't always explain it in marketing, because it felt like a lot of just salesy words of go discover, go. And everyone was like, they could have actually done what ClassPass did without ClassPass, right? But they didn't do it anyway. So, what was going to be unique here? And then the other big thing, and I think like, this is what really, this is when I knew that we were really on to something. It was the viral coefficient of every person saying, I'm gonna have five of my friends join this, right? And when you build a product like that, that people want to talk about and share, I think there's really a lot of magic to that. And that was something that, you know, for us, we focused in on.

• 36:39Speaker 01

  Yeah, you know, going from, I think the time most when I was explaining it was before we had launched. And I'm sure everybody here remembers, like, the difference between when you can show people something, or they can just go look at themselves, and you are just abstractly words, like telling them through words, it's absolutely night and day.

• 36:57Speaker 02

  Once you move to that point, and depending on what you're working on, it could be earlier, it could be a prototype, or it could be, but it's so much better to just show people, or even more so for them to just, for them to use it, and then you maybe you're responding to a few questions.

• 37:10Guy Raz?

  But by the, let's talk about the most, I mean, the elephant in the room, which is the, the, the past 15 months that has forced, for better or worse, innovation across the board. I mean, not just in the way we work and the way we're interacting right now, the fact that we're doing this virtual summit. We have actually, this has been one of the most innovative years in my life, if not the most, for how I built this, for my children's media company. We make a kids' programming. You know, it's been actually, it's forced us, and it's been difficult, it's been very difficult, but it's forced us to make changes that will accelerate our, our, our growth, hopefully, and, and certainly has accelerated

• 37:54Guy Raz?

  changes. Tell me about how the past year has changed the things that, that you all have created.

• 38:02Speaker 02

  Look, for the past year, I've had to expand my capacity for empathy in ways that I would have never expected five years ago. That's a good thing, right? It's a good thing for me as a dad, as a husband, as a CEO, right, as a board member, that sort of thing. In service of our consumers, too, right? That expansion of capacity for empathy means, you know, we got to remember that employees, consumers are people, right? They're people. And we talked a little earlier about like, you know, how do you know that you're certain that the idea is going to work? This is what I mean by the 12-month and 150, and the messiness in between. None of us would have predicted this. I'm so grateful that we set up an infrastructure

• 38:45Speaker 02

  to help prepare us for it. And that preparation is just giving people the grace to have that empathy, right? So, you know, I, one of the kind of best lessons that I've learned here in Atlanta, CEO of Delta, Ed Bastian, he said something to me recently that really stuck with me. He said, let us just hope that we never get too busy to not have the space to reflect again, right?

• 39:11Guy Raz?

  Yeah.

• 39:12Speaker 02

  This past year has provided us space and patience to think so that we can actually act in the way that consumers expect, employees expect, and our families, too.

• 39:23Speaker 03

  That's beautiful. Um, you know, for us mandated by the government, almost every studio was shut down, right?

• 39:30Guy Raz?

  Yeah.

• 39:31Speaker 03

  Within two weeks of COVID starting. So, um, that was like a 95% drop in revenue. It was, it was just a shutdown completely. And I mean, for us, we wanted to make sure we were very empathetic for our customers. Right? I think that was first step. It was making sure we turned off all accounts, making sure no one was being charged. It was obviously the whole world needed to go through this and we didn't know how long it was going to take. And that was, I think, the hardest part is the uncertainty of the length of this for our business like ClassPass because it was so dependent on these businesses. And I think for us, we realized that even more than our customers, and they were obviously okay and we were providing them video streaming, we, and we still need to make sure our partners survive this. Right? Because they have fixed cost businesses.

• 40:12Speaker 03

  So a lot of our attention went to partner survival because, you know, we believe that there's a future head and ClassPass is going to work. It's just a matter of making sure that our teachers and our studio owners get through it. So at the prox of it, you know, we kind of went into a protection mode, of course. And I think one of the other like beauty parts of this, which I like is, you know, the vision of ClassPass was always a little bit broader than fitness. Um, this gave us, gave, gave our team to evolve the product to start expanding into other categories. So, you know, there's, there's a lot of beauty on there now. There's massages, there's wellness and, you know, those activities are also, you know, doing a bit better in COVID times than some of the other fitness studios. So we, you know, it was forced us to think a little bit bigger and, you know, in line with our vision,

• 40:56Speaker 03

  but still give customers what they want.

• 40:59Guy Raz?

  Harry?

• 41:00Speaker 01

  Yeah, I mean, I, I think from, you know, at the beginning, uh, it's now, uh, over a year now. Um, we saw a lot of, less projects launch. I think obviously, you know, creators were uncertain and, you know, you're asking for money. It's a very strange time to be asking for money as well.

• 41:17Guy Raz?

  Yeah.

• 41:17Speaker 01

  So we saw a big drop off, uh, in the first, uh, probably a few months. Um, and the, the biggest concern we found for creators was that people would not be interested in, in backing projects at this time. But when we saw that not change, we, we saw that the projects that launched. Even though it was much fewer than that, we're still doing as well, in some cases even even better. And once creators started to understand that, you know, you saw people come back onto the platform. But at the same time, you know, the these these fields that that that use Kickstarter, right? These are people in theater, these are people in art, these are people in design, like most of the the creator audiences that that use Kickstarter have this other their their main world being kind of like totally shaken up.

• 42:01Speaker 01

  So, you know, I think that there in some cases, there was even more of a need because you might have been like, look, this is what I was planning to do this year, and that's out the window. Maybe I'll take this project that I've wanted to do for years and I'll go do it. I actually expect that that's even now, as things are kind of getting back to normal, there there's going to be even more of that because understandably, a lot of people haven't been they're like, I can't even do my project in these conditions. So I don't want to raise money yet because I can't go fly over there and film and I can't. There's no theater I can go use. So so we'll be really interested to see how much latent, you know, kind of latent creative projects that are out there that people have been developing while they've been kind of in these bubbles and now want to go bring them to life.

• 42:45Guy Raz?

  Friends of mine who work in Hollywood say there's going to be an explosion in scripts and new television series because people have been sort of stuck at home working on that. One one quick thing before we go to all of you, as you kind of survey the startup landscape, you you may just you may have some some random thoughts. Where do you see sectors that are most ripe for innovation? Is it energy, healthcare, I don't know, gaming, fintech? I don't know. Tristan, where do you see it?

• 43:13Speaker 02

  I think, and Perry would probably know this well, I think it's the blurring of this new consumer imperative, particularly a new diverse consumer too, and this empowerment of a creator, right? And, you know, today we live in a world where a consumer is a creator, is a consumer is a creator. And I think there's a lot, a lot of value to be created and captured kind of in that blur. And I'm very, very excited about, particularly in a post-COVID world where folks are figuring this out, like I can be my own boss. I think that's going to be a really, really important theme for the next decade plus.

• 43:50Guy Raz?

  Perry, where do you see innovation?

• 43:52Speaker 01

  Well, I would say, I think governance is the killer app.

• 43:57Speaker 02

  Ooh, I like that.

• 43:58Speaker 01

  But, and I don't mean leadership at like the operational level, I mean at the organizational governance level, the corporate governance level. I think that's a big thing that people are gonna start paying more and more attention to. We've been running so much on this kind of totally profit-centric system in the US, and even the biggest businesses are giving their head nods to a lot of other things that matter in the social contract. But that's gonna take real evolution of governance. I think that's something that nobody thinks about at all, has thought about it all for a long time, but I think this is gonna be an era. And that's how things are gonna differentiate, because, you know, you look at like a lot of, like an Uber and a Lyft, and you're like, it's the same thing, like what's the difference?

• 44:43Speaker 01

  You know, over time, the difference in a lot of things will be governance.

• 44:48Speaker 02

  It's so good, it's so true.

• 44:49Guy Raz?

  Interesting, yep. Powell?

• 44:51Speaker 03

  You know, I feel like the world is about to change in terms of, I really think like consumer behavior is going to be reset, and because of that, there's going to be so much new technology that can serve that. Because any time customer habits change means that there's opportunity for seamlessness, right, and efficiency that needs to be made to help make that better. You know, I also think, like back to what Tristan said, I think diversity is a big thing. And I think for me, being a female entrepreneur, I see it all the time, I think there are just so many communities that have different types of issues. I mean, even as we were doing the fellowship last week and hearing those pitches, like, I think so many of them were also in more niche communities, and I think that's something

• 45:36Speaker 03

  really beautiful, that there is gonna be innovation, that there's going to be money going to these communities that need them. And yeah, these might not be billion-dollar ideas that are serving every single customer, but they are important to solve and important to serve.

• 45:52Guy Raz?

  That's Pao Kadakia, founder of ClassPass. She joined me along with Tristan Walker of Walker & Company and Perry Chen of Kickstarter. You've been listening to my live conversation about innovation from the How I Built This 2021 Virtual Summit. More conversations like this one from the How I Built This Summit will be in your feed soon, including my live interviews with Gary Vaynerchuk, Brene Brown, Adam Grant, and Rashad Robinson. You will not want to miss those. So please keep an eye on your podcast feed. This episode was produced by J.C. Howard with music composed by Ramtin Arablouei. Our production staff for the summit includes Neva Grant, Casey Herman, Julia Carney, Farah Safari, Liz Metzger, Janet O'Jung Lee, Annalise Ober, Gianna Capadona, John Isabella, Ali

• 46:37Guy Raz?

  Prescott, Joanna Palowska, and Jessica Goldstein. Our intern is Harrison V.J. Choi, and Jeff Rogers is our executive producer. I'm Guy Raz, and you've been listening to How I Built This.

• 47:07Speaker 05

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