We've got another fresh business problem for Rocket Blocks experts to solve in today's mock interview. Today's case features the fitness company Strava and begins with a relatively straightforward monetization question, but quickly introduces a strategic curveball. As a reminder, if you want to get better at both straightforward and curveball style questions, you need to be practicing actively and deliberately.
At the very least, pause this video and try to answer each question out loud every time the candidate is asked a question. And when you're ready to get serious about casing, come to Rocket Blocks to try our concepts and drills. Good luck and have fun casing.
>> So, your client is Straa, the social fitness app with over 150 million users. User growth has been strong, particularly after COVID, but the company's revenue per user remains low and its leadership team is under pressure from investors to significantly improve monetization over the next two to three years. You've been hired by Straa's executive team to answer a fundamental question.
How can Straa better monetize its user base while continuing to grow its platform? >> Awesome. That's super exciting.
Um, I am a runner and I love Strava, so I'm excited to do this one. Do we have any information on um what Strava is currently doing to monetize its user base? So, I think based on my limited familiarity with that, there's like a free plan.
Um, and then there's like a paid plan which is I don't know how much, five bucks a month, 10 bucks a month, something like that. Um I guess first question would be is there anything other than that paid plan that they're currently doing to monetize Strava today? >> It's part it's primarily the subscription revenue.
They do have limited but growing partnerships with brands for events, sponsored challenges, and branded inapp content. There's also potential for enterprise wellness partnerships, but that's not really a significant revenue stream today. >> Got it.
Okay, great. Um, and could you tell me a little bit about the Strava users? Uh, maybe like I mean again I'm a runner so I know I use it for running.
I think there are other sports on there like walking definitely. Uh, cycling, swimming perhaps. And then I don't know if there are other sports as well like is there like cross-country skiing and snowshoeing and things like that as well?
>> Yes. Um, I actually live in a ski town and so I use it occasionally for tracking skiing, crosscountry skiing. Um, you can you can really do a lot on there.
Uh, mountain biking. So there there's all kinds of stuff. >> And then do we happen to know anything about like the paid plans for particular sports?
Do we have any idea? Are are people across all sports doing paid plans? Is it mostly running?
I think of it as primarily a running app. Do we have any information on that at all? um we don't have a ton of information about you know what what um sports uh users are using or paying for it primarily.
We do know it's a lot of multisport. It's you know you think of somebody who likes to run, likes to bike, likes to swim, um triathletes, kind of doing a little bit of everything and and want to let their friends know, >> of course. Okay, perfect.
Um and then one last question for you here. You've mentioned that the goal here is to monetize Straa's user base. Do they have a particular target in mind that they want to reach?
No. Do they have a particular like idea that they have in mind of this is the way we're thinking of monetizing and just let's confirm that that's going to work or it's kind of free-for-all here? >> No.
You know, a consulting firm would never go in with a preconceived notion. They would [laughter] always come in with an open mind um and just want to see what the data tells them. >> Amazing.
Okay. Do you mind if I just take a moment to think about how I might structure a case like this? >> Go ahead.
>> Perfect. Thank you. Okay, I think I'm ready if you are.
>> Yep. >> Perfect. So the two categories that I want to look at this in are both relating to revenue.
What we want to understand is how can Strava monetize its user base. The first way to do that is I think by increasing paid users and the second way to do that is other monetization strategies. So as we think about increasing the number of paid users, I think below that there are two subcategories.
The one is just increasing the number of users in general and then I think if we can just keep the same percentage of paid users on a higher user base that's one way to further monetize and then the second way will be to increase the number of users who are paying to beyond the number that are paying today. Um so let's focus first on the increase the number of users piece. I think that uh in my in my mind the way that people probably use Straa today is that they there's a big network effect, right?
People are talking to their friends. They're like, I signed up for a marathon, half marathon. Their friends are like, you have to be on this Straa thing.
Then we can give you kudos. I think we should expand that and think about ways to get people with additional sports on the app. Think about ways that we can have additional partnerships, maybe with like sports clubs, with uh apparel providers.
Um, so a couple of different ideas just get as many people as possible on the app. Then the second branch there is converting more people to paid users. For this, I would really want to understand what the current differences are between the free plan and the paid plan and make sure that there is significant additional benefit with the paid plan.
There are two ways to do this. Sometimes tech companies will roll back some of the features on the free plan to make it so that people who loved a particular free plan feature will upgrade. So, I'd want to see, are there any particular features today that people really love that we might be able to just make only included in the paid plan?
Or additionally, could there be other features that we don't currently have that we might be able to add on? Um, so that's the increase the number of paid users category. And then the second category is the other monetization piece.
And I think really the sky is the limit here. Um, I wonder if there are ways because Straa seems to have a pretty uh strong user base. I wonder if there are ways that Strava could become an events company, for example.
Could they run running events? Could they have like uh marathons run by Strava, for example? Could they become an apparel company?
Or could they combine really closely with an apparel company? Or I'm thinking because they're a tech company, maybe there's a way that they could expand into tech. So, for example, um partner with a company like I know they currently have integrations, for example, with Garmin or Apple Watches, but could they actually develop a smartwatch or a smart device themselves that users could use?
Um, so here I think it's like how might we be able to sell additional products other than just the piece of software that we're currently selling uh to Straa customers. And then the other piece in other monetization that I that I want to think about is is there any way and and we we'd really have to consult with some lawyers on this one, but is there any way that Strava could monetize off of its data from customers? And if so, um you know data could be used by um other sports companies, even like lifestyle companies.
Uh I think there are lots of different people who might be able to use that data. So, uh, th those are kind of the areas that I want to look into to start off with and to sort of better understand what the current situation is. I'd love to dive a little bit deeper into what their current revenue is and really understand like, okay, what is that total number of users today?
Um, I think we had mentioned that the subscription is somewhere between that 5 to$10 per user per month. So, we'll be able to do that calculation pretty quickly. Um, and then just like sort of see what our benchmark is from there.
Here's some feedback from Maddie. Tessa's questions are directed. What's the model for monetization and what do we know about users?
These are not performative questions and they're clearly driving towards a particular hypothesis that she's going to explore in her framework. Tessa does a good job to include the goal of the case as she's introducing her structure. A common mistake for candidates is to launch into three random buckets of information that are related to the problem, but don't explicitly connect your framework to the goal.
Tessa here does a good job to drive the case from a top-down problem solving approach. It's clear from the jump that we're here to answer how can Strava monetize its user base. Tessa's approach is a really solid MC framework.
This is a simple formula for revenue. Users times revenue per user. And Tessa pulls apart that formula to explore ideas to solve Straa's problem.
If you get a case on raising revenue, one key element to include is pricing. Even if you choose not to raise prices as part of the solution, it's important to explicitly call that out as a choice and not just make it seem like an omission. Tessa does great to suggest a first step for exploration.
Remember, you are solving this case. So, when you're done with the framework, you need to take the wheel and suggest where to go first. >> Well, I'm going to stop you there.
That's a great place, and we're going to go there in a minute. Um, I know you listed off some ideas, but I think it would help us to just brainstorm right now if you could help me think through some what are the some of the key ways Strava could increase revenue right off the bat without losing its core users or alienating free users u before we jump into the rest of the case. >> Okay, great.
Um, so increase revenue without losing any of the free users or um or sort of like alienating them I think you mentioned. So I think the key off the bat is I'm going to remove my idea from the framework of like uh take some of the free features [clears throat] away. Um so I would say for that I would say uh I want to categorize this into potentially two buckets.
One being uh something that Straa can do as a standalone. So like the Straa proposition and the other being a partnership proposition. And we'll go into to what that might mean.
So for for the Strava proposition, it's like okay, what can Strava do today? Additional features, add additional events, things like that. So I'm thinking like could they actually create an inapp marketplace?
Something like, you know, Runna, like maybe they could do something like Runna, that app where they uh have training plans for people and they can use the Straa data to actually develop training plans and then maybe even refer them to a coach, a professional running coach or cycling coach or triathlon coach and take a small fee off of that. Um, another idea might be to uh sort of launch uh launch events, whether that be running and fitness events or whether that be maybe even like yoga, meditation, go into a slightly different vertical there that the same people might really like. Um, and then finally, I wonder I'm not sure, but I wonder if there are additional geographies or spaces that Straa might be able to go into.
So, um, I'm guessing that they're pretty global, but maybe there might be some untapped places in the world that they could enter. And then for the second bucket, it's really that partnership piece. And I think for the partnership piece, I maybe they could partner with brands to offer better integration.
So again, making sure they're integrating with like all smart tech. I know they do Garmin and Apple, but maybe like Whoop, I think, is a brand. I don't know if they are uh aligned with Zift or something like that yet.
But just making sure they have all of those like tech integrations. And then the other piece of partnerships could be things more like the apparel and everything like that. >> Okay.
Here's some feedback from Maddie. Tessa references her original framework as she introduces this brainstorming exercise. One self-ealuation you can do as you complete practice cases is to check how many times you mention your framework after the opening of the case.
If the answer is literally zero, then you're not actually using that framework to solve the case. >> Well, Tessa, you clearly know this space pretty well. So, moving on to where you wanted to go.
Mhm. >> Strava currently has 50 million monthly annu uh monthly active users. 30% are paid at $9.
99 per month. What is the annual revenue? And if they want to grow by 50% in two years, what combination of subscriber growth and ARPU uh increase could get them there?
>> Okay, perfect. That was quite a bit of info. So maybe if I could just repeat that back to you.
Um, so they currently have 50 million users. I think you you mentioned AUM or active monthly users. So just confirming.
Yeah. Okay. >> Um, perfect.
30% of them are currently paid, which is really quite a high percentage. I'm kind of surprised that it's that high to be honest. Um, and it's $9.
99 a month, which for the purposes of math calculations, I'll probably just round up to 10. Um, then for the question is, what is their current revenue and what would they need to do to grow by 50% in two years? So to start off with to calculate their current revenue, what I would just want to do is the total number of monthly users uh monthly users times the percentage that are paid.
>> Mhm. >> Times the dollars per month. And then that's going to equal the total monthly revenue.
And then we're going to need to multiply the total monthly revenue by 12 to get the annual revenue. Unless what you want is the monthly revenue. Sorry, maybe I should have clarified.
I assumed annual. >> Yeah. Okay.
>> Sorry. Say that one more time. Yeah, that works.
>> No, no worries. Yeah, perfect. Okay.
So, so we're going to have 50 million users times 30% paid users times $10 per month and that is going to equal Okay. And then we're going to go that times 12. Um, perfect.
And that is going to equal Is that 1. 8 billion? Does that sound about right to you?
I'm trying to think in my head about whether that >> Yep. Sounds right. >> Right.
Yeah. Okay, perfect. Um, okay.
So, currently they have annual revenue of 1. 8 billion. Wow, that's a lot.
That's a lot. That's actually like when I think about 50 million users, I guess that's where all of the value is driven. It's in the number of users.
And what that says to me is like thinking back to the brainstorming and thinking back to the overall prompt, increasing that number of users has been thus far the key driver to Straa's success. Just having a lot of people on the platform. Now, I think that it's about time that it's like how do we get more than just $10 per month out of those users?
That's what I'm thinking seeing such a big number from 50 million users. >> Okay, but we still need to get to your second question here, which is how are we going to grow by 50% in two years? Um, so if we take 1.
8 million, then we what we want to do is increase that by 50%. So that would be 900 million plus 1. 8 is 2.
7 2. 7 billion um is what we want to get to in 2 years. Wow, that's quite a significant uh significant growth.
So if we think about uh that additional 900 million that we need to get, we can either think of that in terms of number of users or value per user. Were those your two options that you had also provided? Number user increase or value per user.
>> Exactly. >> Great. Okay.
Um so how might we be able to do that? So, we could either say uh I mean one way would be we get an additional 25 million users on the app, >> right? That's option number one, 25 million users on the app.
>> Option two is we increase the percentage of users to 45% that are on paid plans. >> Mhm. >> And when I think about those two options, I think that both of them seem incredibly ambitious.
So, I wonder if it's almost like a mix or a combination of those two options where we actually say, what if we could get, you know, an additional 10 million users on the app and then increase so that there's 35% on paid plans and then maybe you even add a third lever here where we say then we increase the monthly fee to 14. 99 per month. >> Yep.
>> Yeah. What? So yeah, that's another question is kind of how much would we have to raise price um to get there as well.
>> So if we were to keep the same exact number of users and the percentage that are on paid plans, >> then we'd want to increase the price by $5, right? By 50%. So we'd want to increase it to $14.
99. >> Yeah. >> So I think any of those three options in silo, I think if I had to choose just one, I would choose to increase the price to $14.
99. To me, that doesn't seem like that big of a jump for somebody who's already paying $9. 99.
I can tell you, every month, I expect all of my subscriptions to go up. It's crazy how some of these things are going up. The other option that they could explore is almost creating like two separate tiers.
Um, I know on like my Amazon Prime video that you can have like ads now and it's way cheaper. So, I wonder if there's a way that they could explore a happy medium here. Um, but I would say if I had to choose one, I choose to increase the price.
But I think the best way will be to make a staggered approach and try and increase all three. >> Okay, >> perfect. Um, so as I think about uh the overall question here and as I think back, how can Strava monetize its user base?
Um, I think that uh I I feel pretty confident that that's what we would want to do. And in order to to go for next steps, I would be curious about whether you had any data or information on how users feel about the pricing strategy or how similar apps are currently priced like something like a Runna or something like that. Um, I would also want to understand a couple of my key questions from the beginning about uh whether there are different geographies that still haven't been penetrated or other partnerships that we could explore.
But let's if you h do have the data, let's next explore sort of that um h price sensitivity piece. >> Here's some feedback from Maddie. We often talk about the so what at the end of a calculation, but it's important to remember that the so what is not just the period at the end of the quantitative sentence, but rather the whole purpose of the calculation to begin with.
Tessa does well here to highlight just how big Strava's revenue is in the middle of her calculation. The implication of her intermediate number are so stunning to her that she interrupts her math to highlight this point for the interviewer. Tessa's calculation was a straightforward product of three to four numbers.
As a simple thought exercise for how to bump revenue by 50%, she starts by saying that we can just take any of those factors and bump them by 50%. And she explores what that might mean in terms of qualitative changes for the company. By understanding the boundaries of what would need to happen for any of the factors in isolation, she's better able to recommend a logical mix to achieve the company goal.
>> You bring up some interesting points here, but we're actually going to go in a little bit of a different direction. So, the head of strategy at Strava thinks that focusing on monetization is missing the point. Really likes your ideas, but that's not where we want to go.
So over the past few years, our partner and friendmy Garmin has been investing in a competitive platform to Straa called Garmin Connect. And as of last year, Garmin has been restricting API access to Garmin data for other players, including us. The head of strategy thinks monetization should be shelved as a goal until and unless this risk is addressed.
So far, all options are on the table with Strava's COO, especially calling for a legal response to Garmin's actions. How do you think Straa should respond to this threat? >> Oh, wow.
Okay, this is definitely a curveball. So, um, just to make sure that I fully understand because I'm also a Garmin user, but I didn't even realize. So, the Garmin Connect app, the idea is that Garmin has been building this app to actually compete with Strava and have the two have the two apps be essentially competitors.
When you say that Garmin is restricting uh access to their API and access to their data, can you tell me any more about that? Like what type of data is currently being shared with with Strava and what are they planning to do? >> Yeah, so we don't have a ton of information all all the information there.
That's kind of what we do have, but I'll say from Garmin devices, you used to be able to upload it um for your Strava workouts and now that's no longer the case. It has to be done manually. Okay, got it.
Okay, >> so rather than saying, "Hey, I where my watch, it's going to automatically upload," you'd have to take those stats and then, you know, type in four mile run x time. Yeah. So, you're losing a lot of that functionality.
>> Got it. Okay. Do you actually mind if I take a minute just to think about what my responses be?
Thank you. >> Okay. Uh, so I think the way that I would want to break this down is into three categories.
The first is Strava which is basically focus on what we can control here and think about what Strava can do independent of what's happening with Garmin. >> The second category is going to be the Garmin category and that's going to be how can we go to them and actually prove our value as partners. I don't believe that Straa has been in this partnership for this long and hasn't thought about hm what might Garmin be getting from us that they might not want to do themselves.
That's partnership strategy 101. But if they haven't been thinking about that, then it's time for us to start thinking about it now. And then category number three is going to be other partnerships.
So if all goes to the wayside with Garmin, are there other wearables? Are there other partnerships that Straa can do to actually diversify their strategy away? So starting with the first category, the Straa category, um I would say the first thing that comes to mind is Straa might want to think about competing with Garmin as well.
If Garmin wants to compete with Straa and create an app that perfectly rivals and somehow that's not against the terms of service and the contracts that the two companies have with each other, then Straa should go do this exact same thing. Create a wearable brand, the Strava brand, make it better than Garmin, and go out on the market to the Strava customers. Of course, it might be harder to create hard tech than software.
So, I think Straa's probably at a disadvantage in this. Um but I will say that um that that's the first thing that's coming to mind. The second category which I think is where we should focus our efforts for this discussion is the Garmin category.
Um so I think Straa needs to figure out what they can do if there isn't something already that will make it so that Garmin sees value from that relationship and doesn't want to create their own proposition. So, what I'm thinking is could again back to this like coaching marketplace idea, back to this uh AI coaching idea kind of like Rena is doing. Is there a way for Straa to offer things to Garmin that they can't currently offer through Garmin Connect?
Um, make it a little bit stickier for them, make it so that they don't want to leave. Also, under the Garmin bucket, I know you mentioned legal action. I think that should definitely be the absolute last option, but maybe before pursuing legal action, it might be time to just like review all of the contracts, have like some friendlier legal discussions with the Garmin team about what they might be in breach of if they continue to go down this road.
And then on the last category, which is other, I would really want to think about device integration diversification. Um so specifically like Apple as we had mentioned, Whoop as we had mentioned, any other wearable brands or like other software like Zift that they might be able to integrate with um to actually make sure that they are um diversifying and if if the Garmin deal falls by the wayside that they still have their own unique value proposition. Um so as I mentioned where I would want to focus is in the Garmin bucket making the product stickier having friendly legal conversations and um that's what I would like to explore next is really looking into what does Strava offer today that uh Garmin's G I think it's called Garmin Connect app does not offer that they might be able to make a little bit stickier and continue to develop to keep the relationship alive.
>> Okay, that's great. Well, I I hadn't heard about friendly legal conversations before, but [laughter] um I think that's that's a a creative one and I I like that idea. >> Thanks.
>> Here's some feedback from Maddie. Tessa does well to readjust here. This latest question is effectively a restart to the entire case.
She does well to begin with a new framework and to think through the implications holistically rather than just start rattling off ideas. Tessa does well to not just list out ideas, but to give some context for pros and cons of her specific ideas. For example, it's harder for Strava to build the device than for Garmin to build software.
There was an opportunity here to address what's happening at a meta level in this case conversation. The question wasn't directly asked, but the implication of Tessa's response is that we should focus on this problem before thinking more about growth. It would be worth it to call out whether or not you think this conclusion is right.
Should we drop monetization as a goal and talk about focus on Garmin or should we ignore Garmin and focus on monetization or are we able to do both at the same time? >> So, we've actually put some some data together uh on this issue. >> Can you see my screen?
Okay. >> Oh, wow. Yep, I can see it.
>> Okay. So, what do you notice about this chart with Strada and its main competitors including Garmin Connect? >> Wow.
Okay. So along the x-axis I can see years starting in 2020 and going to 2025. And then along the y-axis it's the number of monthly active users with the top of the chart being 50 which is as we know the number of use monthly active users that straa has.
The first thing that I'll say is I was surprised that they had this many monthly active users and I was right to be surprised because they are head and shoulders above everybody else. Um the second thing that I would say is there was a clear inflection point in 2023 which is really interesting because my perception would have been that the 2020 2021 COVID era was when everybody in my personal network was using Strava and was a big user. So I'm really interested and curious about what happened in 2023 for that big inflection point.
>> So as I look at this there are a couple of key things. One, I think the main stickiness for Garmin, uh, for Garmin is Straa's lead just in terms of the total number of people on the app. It does make sense that Straa would have more people than Garmin because it's just an app that they can download onto their phone versus a fairly expensive wearable device that Garmin is offering.
Um, but I do think that this is definitely one negotiating chip for Straa is do you really want to lose access to all 50 million of our users? And that will be an interesting question. Um the other thing taking one step away from this very pressing issue that the head of product is most interested in is thinking back to our original question which was about how can Strava best monetize their users.
Again, I'm going to go back to they have such a big user base that is definitely their biggest asset here and it's how can they continue to monetize on their existing users I think is probably going to be their most important piece here. >> Okay. What about the other competitors?
Anything you notice there about them? >> Yeah, I would say like none of the other competitors are really growing. Maybe All Trails.
I think All Trails is the the next one like right above the others. It's like grown a little bit, but um and I guess All Trails could sort of be considered a competitor to Strava as well, although it's quite a different value proposition. I don't think it's has a social media aspect to it at all.
Um so yeah, my biggest takeaway for the other users would be they're quite far behind the other two. Um, and so for the perspective of Straa and looking in that other category from the past question, there's not a great option for Straa to go and partner with just one other. So, Straa and Garmin have a very unique relationship with each other where they both probably don't really have a better option.
>> Okay. Um, and and then the the other thing that's actually coming to mind as you ask that question is could this be a unique opportunity for Straa and Garmin to like merge or create some type of more less of a commercial partnership and more of a business relationship and business partnership. Um, they would absolutely dominate the market.
So that's the other thing that maybe Straa could consider here. Um but yeah, based on this, I would say uh my my conclusion kind of remains the same. Straa should try and continue to monetize their users, their existing users as much as possible.
Um but I do think that really the next step with the Strava Garmin relationship needs to be repairing and retaining those relationships. Um so so again I would want to look into what products does Strava offer that are really sticky and important to Garmin for those negotiations. >> Okay.
Um we don't have any information there. Is there anywhere else you might want to look? >> H very interesting.
Um maybe so I guess thinking about all of these various competitors and thinking back to like Apple uh which like the if we had a similar chart about like the hardware uh products and the wearable devices. >> Okay. Do we know sort of what percentage of the uploads come specifically from Garmin versus the others?
>> Here's some feedback from Maddie. Tessa quickly describes the chart and the data we're looking at. And critically, she calls out one data point, the 50 million users, and says, "Yes, that's what we already know.
" She's not looking at this chart in a vacuum. She's looking at it in the context of the case and is using this new exhibit to sanity check her own assumptions. And she does this all very crisply in a tight 15-second intro.
Tessa does well to move past the first order insight, saying that the straa line is the biggest and into the second order impact. This is a negotiation chip. It's an asset, and she identifies that and puts it into the context of the current case question and communicates this new idea eloquently and effectively.
Tessa also does well to contextualize this chart from the original case question. She is smoothly integrating this data into two different case questions at the same time. Oh yeah, we do.
It's >> a great question. Um, so as part of our study on Garmin, an analyst on our team pulled the following data. What are the implications from these two, this chart and this table?
>> Great. Okay, so we have the sources of uploads to Strava from 2020 to 2025. Okay, same time frame as we saw in the last chart along the x-axis and then the y-axis.
It's 100% stacked bar. So this is their total users. We know from previous data that this if it wasn't a 100% stacked bar, there's a huge inflection point here.
So just keeping in mind even if it looks like a segment might be decreasing, we know that in absolute terms it's increasing. Uh okay. And so we see uh the big orange piece is Garmin.
Of course it is. The big orange piece that's 60% pretty much all the way through is Garmin. Apple Watch.
Okay. Apple Watch is gaining over time. Pelaton is gaining over time.
Whoop is probably about a similar percentage maybe gaining slightly in the first couple years but it's pretty similar and then other is decreasing over time. Okay. Um so before we go on to the second chart I just want to say I think again this solidifies Strava and Garmin have a very important codependent relationship here.
Uh it's going to be extremely devastating for Strava if the Garmin segment here completely disappears. On the other hand, Apple Watch is increasing, which means it's been increasing on an absolute terms if things really do go by the wayside with Garmin, really doubling down on that relationship with Apple Watch, Pelaton, Whoop, but Apple Watch in particular, and seeing if they can create a really united front, an amazing experience. Straa, I'm sure, is uh an iOS app as well, and so it's kind of a mutually beneficial relationship.
I think Apple takes a percentage fee off every subscription that goes through iOS. So, they want Straa to continue and to be there and to maximize revenue. But I wonder if there's a way to to tie that even tighter together.
Then when I look at the second chart here, we have metric Straa Garmin platform. Okay, cool. So, we have the monthly active users, Straa's 50 million, Garmin's 25 million.
Average revenue per user $5 per year. $5 per year. Okay.
The weighted average >> a little bit outdated. Yeah, exactly. From what we've done before.
>> Okay. Average revenue per user $5 per year, $8 per year. Feature velocity for Okay.
Feature velocity four major launches and two launches. Okay. Ecosystem strength.
Very interesting. Okay. So what we can see here is Strava and Garmin in terms of like the total annual revenue are pretty much exactly the same because Straa has the double the users and Garmin has double the average revenue per user.
Um the Garmin platform. Okay, interesting. And so that wouldn't include any of the Garmin hardware.
Is that correct? >> That's correct. So the Garmin enterprise value would be significantly higher than Straa's enterprise value because it would also have the hardware piece and they have very similar revenue and then very similar I guess data.
Maybe the only thing that would question that is whether Straa also has access to Garmin's data. It sounds like they do. So maybe their company is slightly more valuable because of the data.
Uh then in terms of feature velocity, it seems like Straa my perception is that it does have a higher it's more of a tech company. It has a higher like tech brand. Um but I'm interested to see that that's true here since it sounded like from the prompt that Garmin is like developing rapidly and trying to match what Strava is doing here.
Uh so I kind of would have expected them to have the same number of launches as Strava. And then when we think about the ecosystem strength, yeah, Strava has a high social loop. I don't know if Garmin Connect you can give kudos or follow friends or things like that.
Um, so maybe that's something that they're planning to do coming soon. Um, but as I think about this, I mean, honestly, I didn't expect Garmin to be such a big player on its own without Strava. This does worry me and it means like I think Straa should be prepared to concede quite a few things to continue the relationship with Garmin.
Um, that's what I would say. Yeah. >> Great.
>> Here's some feedback from Maddie. Again, Tessa does well to clear the chart this second time with new information presented to her. Importantly, on the flip side from the previous chart, this chart shows Garmin's negotiating chips in the current debate.
Tessa does well to identify this and brainstorm different solutions for our client. >> Well, um, [clears throat] what would you recommend to Straa's leadership? Um, how should they balance monetization with long-term platform health, especially in light of this Garmin issue?
Yeah, great. Okay, so in terms of my final recommendation, I think that the the number one priority needs to be to put together a special task force to Garmin the to the Garmin situation and figure out a way that they can continue to prove their value to Garmin and to continue relations and make sure they can keep working together. At the same time, the other 95% of the business should be focused on monetization, doubling down Straa as a company.
There's no reason for everybody in the company to be working on this Garmin situation. This is something that for the executives to talk about in a small task team and everybody else should be focused on monetization and making Straa as valuable as possible as an independent company. In terms of next steps, I would want to review all of the contracts with Garmin, understand what we can continue to offer them in terms of Strava products that Garmin will have a hard time building uh to prove that value.
And in terms of key risks, I think we know the main risk is Garmin says they don't want to work with Straa anymore. That will be devastating to the company. >> Awesome.
Thank you so much, Tessa. >> Thank you. Here's some feedback from Maddie.
Tessa's recommendation is super crisp and actionable. She addresses both of the questions in the case and even gives a hypothetical split of company focus to pursue solutions. >> Hey everyone, it's Kenton Keski here, the founder of Rocket Blocks.
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