BSBDS

1) What is the business model and what will change if it takes a B2B approach?
Ans: Currently, Stickk is operating under a B2C model providing solution to the ongoing problem
faced by individuals of lack of commitment towards their goals. Stickk is a goal setting platform
which uses “commitment contracts” to help its users achieve goals based on psychology of loss
aversion. A commitment agreement is basically a binding agreement that an individual sign with
himself to ensure that he follows the set commitments.
Stickk is the only player in the market that uses the approach of helping people using their scare of
financial loss, its regret and social norms. This is a freemium model where it offers free services to
gain future transactions. Basically, Stickk is free but in order for it to work properly the users are
encouraged to create commitment contracts with some monetary value involved. The users are billed
when they or their referee report of them being unsuccessful in their goals, or when the user fails to
submit the required report on progress.
Setting a goal on Stickk involves 1 four step process for the user:
Step 1: Set a goal
Step 2: Set stakes
Step 3: Set a referee
Step 4: Ask for support
In the current scenario the revenue sources for Stickk come from commission on transactions when
the user fails to fulfil the contract
a) For contracts where the recipient is a friend or foe, Stickk does not charge any money as
commission.
b) For contracts where the recipient is a charity, stick charges 19.5 % of the money as commission
c) For contracts where recipient is anti- charity, Stickk receives 29.5% of the money as commission
 Approximately 80% of the contracts for Stickk deal with weight loss goals. However, Stickk does
not commit itself towards a niche segment.
 32 % of commitment contracts on Stickk involve some stakes, and 82.8% of them are completed
successfully.
If the company decides to take a B2B approach, then it would have the following impact on the company:
a) The revenue stream for Stickk will improve as they will be directly able to charge clients for a
start-up fee to develop private label platform for the client. A monthly administration fee will also
be charged depending on the number of users.
b) Large contract with corporations would require additional resources that includes managers, web
developers and infrastructure. All these expenses will add to the operational costs which would
increase significantly for Stickk.
c) The competition for Stickk would increase as companies like Virgin Plus already operate in this
segment with 100+ client contracts who paid a monthly fee per month.
2) How does Stickk make money? Calculate revenues for B2C model and B2B model. Which one is
more lucrative?
Stickk charges a commission on transactions taking place due to failed contracts. In the current
scenario the revenue sources for Stickk come from commission on transactions when the user fails to
fulfil the contract
d) For contracts where the recipient is a friend or foe, Stickk does not charge any money as
commission.
e) For contracts where the recipient is a charity, stick charges 19.5 % of the money as commission
f) For contracts where recipient is anti- charity, Stickk receives 29.5% of the money as commission.
Stickk also charges money to companies that it provides services to. They charge a flat start-up fee
between $20000 to 50000 to develop the private label platform for the client. Also, Stickk charges a
monthly administration fees of $10000 to $20000 depending on the number of users.
Number of commitments ( assumed) 1000 Friend Charity Anti- Charity Total

% of contracts invloving stakes 32% Recipient of Stakes 26.30% 21.60% 52.10% 100%
No of commitments with stakes 320 Success Rate 75.70% 80.10% 87.10%
Average Stake Value $360 Commision 0% 19.50% 29.50%
Reciepient of stakes per 1000 commitments= No of commitments with stake* Recipient of stake Recipient of Stakes per 1000 commitments 84.16 69.12 166.72 320
Users Failing= Recipient of stakes per 1000 commitments * ( 1-success rate) Users failing 20.4509 13.75488 21.50688
Average Stake Value (Category) = Average Stake Value Average Stake Value(Category) $ 360.00 $ 360.00 $ 360.00
Commission per User = Average Stake Value( Category) * Tariff Commision per User $ - $ 70.20 $ 106.20
Commission per 1000 commitments from failed stakes= Commission Per User * Users Failing Commission per 1000 commitments from failed stakes $ - $ 965.59 $ 2,284.03 $ 3,249.62
The above calculations have been done for 1000 commitments. But it has been mentioned in the case that
in 2012, 70,000 commitments have been executed.
Thus, total revenue from 70,000 commitments = $3249.62 x 70,000/1000 = $22747.34
In case of B2B:
Flat fee for Software Development= $20,000 to $50,000
Monthly administration = $10,000 to $20,000.
As per case, Stickk is positive about signing a deal every two month. Thus 6 such deals per year.
Average flat fee = $35,000 &
Average monthly administration fee = $15,000
Average yearly administration fee = 12 x $15,000 = $180,000
Total fee for a project(single client) = $35,000 + $180,000 = $215,000
Total income from 6 such clients = 6 x $215,000 = $1,290,000
The above calculations show that the B2B segment has better opportunities for Stickk in terms of revenue
3) What would you recommend to Jordan Goldberg?
The direct revenue calculations show that B2B has better prospects for Stickk. However, the goal of the
founders is to help people achieve their goal using behavioural economics. With a B2C model the
dynamics of the organisation might completely change. As of the now Skickk helps its users achieve
goals based on psychology of loss aversion. However, in case of B2B model this might change as there
are no wager/bet money, but gifts that are given to people reaching their goals. Hence there might be an
absence of fear of losing money, which may lead to lost interest in the wagers and hence Stickk might
lose its popularity. So, since right now there is a limitation on resources, I would suggest Stickk to not
entirely focus on B2B segment. The company can focus more on B2C initially and build a much stronger
company, and after some time venture into B2B when it has enough resources to focus on both B2B and
B2C.

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1) What is the business model and what will change if it takes a B2B approach?

Number of commitments ( assumed) 1000 Friend Charity Anti- Charity Total

3) What would you recommend to Jordan Goldberg?

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