Case Submission: Making Stickk Stick

Q1. What is the business model and what would change if it takes a B2B approach?
Stickk’s B2C model is fairly simple business model, where a user creates their account on the
stickk’s website by entering basic details, and then enters into a commitment contract in
which they commit to achieve a particular goal. The contract that an individual enter into
would be encouraged to have a monetary wager so that they stayed committed with their
goal. In the event when a goal was not met, then the individual would forfeit the money,
which in turn they could choose to donate to a charity, anti-charity, or their refree/friend.
According to the case, 32% of the commitment contracts included stakes. StickK then
collected a certain percentage of money, which varied based on the stakes’ destination. It
took no money when the money went to user’s friend but took 19.5% if the money went to
charity and 29.5% if the money went to anti-charity.
The B2B market required stick to create and deliver personalised solutions for the different
clients, which incurred additional development and maintenance costs. It followed a direct
sales method, and provided product demonstration to prospective clients. The personlised
platform meant additional costs, and stick had come up with a pricing model based on the
complexity of the project:
 A flat startup fee between $20000-$50000
 Monthly administration fee between $10000-$20000, based on the number of users
Q2. How does stickK make money? Calculate revenues for B2C model and B2B model.
Which one is more lucrative?

B2C  
Total Users (June 2010) 60000
% of contracts with stakes 32%
Number of user contacts with stakes 19200
% of anti-charity recepients 52.10%
% of charity recepients 21.60%
% of friend recepients 26.30%
Number of anti-charity recepients 10003.2
Number of charity recepients 19200
Number of friend recepients 4147.2
   
Average amount($)/Stake Contract 360
Amount from Anti-Charity Recepients (Failure rate: 464548.
12.9%) 6
Amount from Charity Recepients (Failure rate: 19.9%) 1375488
362797.
Amount from Friend Recepients (Failure rate: 24.3%) 1
137041.
Amount Received from anti-charity recepients (29.5%) 8
70745.4
Amount Received from charity recepients (19.5%) 3
Amount Received from friend recepients (0%) 0
 207787.
Total amount received from failure of commitment 3

B2B Mid-Sized Large-Sized

Large-Sized Firm Firm
Mid-Sized Firm Firm (Scenario (Scenario (Scenario 2
(Scenario 1- 1- Lower 2 Upper Upper
Lower Limits) Limits) Limit) Limit)
Startup Fee 20000 20000 50000 50000
Administration Fee (Monthly) 10000 20000 10000 20000
Administration Fee (Yearly) 120000 240000 120000 240000
Total Fee (For Single Company) 140000 260000 170000 290000
Total Fee (New Deal/2 months=6
Companies) 840000 1560000 1020000 1740000
         
Salary and Infrastructure Expenses 85000 85000 85000 85000
Total Yearly Expenses (New
Manager/ 6 months) 127500 127500 127500 127500
         
Net Profit 712500 1432500 892500 1612500

The calculations clearly predict that B2B model generates higher revenue than B2C model,
making it more lucrative.

Q3. What would you recommend to Jordan Goldberg?

On purely considering the revenues and subsequent profits, the natural choice would be focus
more on B2B market in the future.
But on a deeper analysis, B2C market seem to be more attractive when considering the
following points:
 B2B is labor intense, which could make it unscalable in the future
 Higher costs in B2B make it accessible to larger enterprises only
 Stronger Competitors in B2B play
 Hard to have a generic platform development strategy, therefore require more time
and effort, again affecting scalability
The Company could enhance its B2C play by:
 Having Scheduled/recuriing engagement activities to boost retention
 Add a Coaching feature to the existing commitment contracts feature by payment of
subscription fees
 Copyrighting and possibly monetizing its Commitment Contracts architecture, to
increase barriers to entry.