Give ‘Em Options: Lessons From a Kid-Targeted Membership Startup
The for-profit Silicon Valley startup KidPass, which recently closed a $5.1 million funding round, offers a fascinating way of thinking about membership. Here's why.
If you’re a parent, this might sound familiar: One day, a kid is interested in ballet; the next day the child wants to try a musical instrument out for size. Or yoga. Or swimming. Or tennis.
Now, this state of affairs can get costly. If you’ve already spent the money on a lengthy ballet program, it’s going to be a pain to switch gears, and you may be unable to get a refund.
But the startup KidPass takes a different route to membership: Rather than tying a child to a specific activity, the $49/month program gives a family with two kids up to 10 activity credits that can be used for all sorts of child-friendly events. (For larger families, different tiers with more credits are also available.)
The model recently received a nod of support in the form of a Series A funding round, which allowed the company to raise $5.1 million.
Currently, the startup is available in and around New York City, with plans to expand to Boston, Chicago, Los Angeles, San Francisco, and Washington, DC. Since the January 2016 launch, more than 20,000 families have tried the NYC service, which has 3,000-plus subscribers and a growth rate of between 20 and 30 percent.
The Spark of Inspiration
In comments to TechCrunch, KidPass Cofounder Solomon Liou said the idea was inspired by the founders’ own kids. Part of the problem, he noted, was that it was often difficult to find interesting things for kids to do—and it usually required research, a long-term, upfront commitment, or both.
“While there were mobile apps to instantly book restaurants, doctors, and taxis on-demand, there wasn’t anything like that for kids’ activities,” Liou told the website. “In fact, the main way that parents discover kids classes today is still through word of mouth from talking to other parents, or using Google Search and going through page after page of results. It’s time consuming and difficult to navigate, with many businesses not even having a presence online.”
While a for-profit endeavor, the startup, which was a member of Y Combinator’s Winter 2017 class, has a lot of ideas that could be translated to the world of membership in particular—specifically, flexibility as well as a reliance on partnerships to expand the number of options available.
Thinking in Terms of Credits
Liou noted that part of the secret to the model’s success so far has been the credit system, which avoids some of the pitfalls of similar companies, like the adult-focused fitness program ClassPass, which ran into early problems by offering an unlimited model and eventually had to get rid of the promotion entirely.
In comparison, some KidPass offerings might be worth a single credit, while a single full-day camp might cost 10 credits on its own. This not only keeps the business model manageable but also helps vary the options some.
“We have had positive gross margins as a business because of our business model, and we intentionally avoided any unlimited plans that could be highly unprofitable,” Liou told TechCrunch.