Founder Profile: The Man Behind The CARROT

I spent 15 years as a powertrain engineer in the auto industry, and as much as I loved my job and appreciated my increasing responsibilities, it was taking me away from my family. At that point, my wife and I had three young children, all under the age of seven.

So in 2012, with the support of my wife, I walked away from a very secure job to create a new startup — a mobile gaming company called Marvel Apps. I brought on young developers from the local universities, and we were making some very innovative products.

But about two years later, my wife approached me — and she wasn’t happy. She was thrilled that our new mobile gaming company was doing well, but it was coming at a cost. Her concern was that we were contributing to a very big problem in society where people are hypnotized by their mobile screens; they’re sitting more, and moving less. We were contributing to unhealthy behaviors.

So we decided it was time we were part of the solution, not the problem. As a software company with a reputation for making fun, engaging mobile games, we decided to “gamify” health and wellness – and we called it “CARROT”.

CARROT’s Software-as-a-Service business model is driven by the CARROT Wellness mobile app which, at its essence, rewards people financially for walking. We think that’s a powerful message, and it resonates with our clients and users. Our mobile gaming company has successfully “gamified” health and wellness, delivering a unique solution designed to improve people’s lives, one step at a time.

CARROT serves as an effective corporate wellness program for employers of all sizes. At the same time, non-profit hospitals and similar organizations utilize CARROT as a community health and wellness initiative.

Unlike anything in the marketplace, CARROT’s “set-it-and-forget-it”, gamified approach uses individualized goals and instant gratification to motivate even the most sedentary individuals. CARROT leverages the viral advantages of mobile technology to quickly onboard small employers while offering a dynamic, scalable solution for the world’s largest corporations.
And for non-profit hospitals – who are mandated by the Affordable Care Act to meet the health needs of the communities they serve – CARROT serves as a compelling, affordable and measurable tool to engage the public.

CARROT’s ultimate mission is to lead each participant, subtly and incrementally, to adopt a healthy habit of movement for a lifetime – it creates a “new normal” of activity for each user. The app looks at each participant’s activity history to meet them where they are today, providing an individualized goal which updates daily to keep the user engaged.

It’s no secret that most wellness initiatives attract primarily the healthiest, most fit employees. Conversely, 2-out-of-3 people enrolled in CARROT’s proprietary program begin with a goal of less than 4,500 steps, demonstrating its appeal to those who do not typically participate in activity programs.

CARROT’s individualized goals level the playing field, making it possible for the most sedentary staff member to compete equally with a marathon runner for rewards and prizes.  And with the use of an Apple Watch and iPhone, manual wheelchair users can also compete for rewards. CARROT’s patent-pending program is ADA compliant, allowing any individual, regardless of level of activity or ability, to fully participate and earn rewards.

Participants earn two virtual currencies, “CARROT Coins” (a.k.a. “Goal Coins”) and “Reward Points”, which can be used to compete in contests and purchase digital gift cards that are available right on the app. These special currencies play an important role in the gamification of wellness.

CARROT’s gamification includes many elements. All participants contribute toward their department’s success on a company-branded “CARROT Leaderboard” where monthly prizes can be won.  CARROT’s “unlockable rewards” require the user to achieve a personal goal streak to access special incentives. In CARROT “Survivor Challenges”, people compete to see who can make their personal goal the longest – it’s a unique ‘last person standing’ competition.

CARROT also features team walking challenges, “Versus” fantasy football, the “CARROT Oscars”, and other contests throughout the year. These competitions are available to all users – but to participate, they must “purchase” an entry using the currency they’ve earned for walking.

Leveraging our mobile gaming expertise, CARROT eliminates friction at every turn to give each user the best experience possible. There are no web portals, and no passwords to remember. The app doesn’t even have to be on or running in the background to earn points. Because the entire program is designed to operate on the user’s phone, there’s no need to purchase a fitness tracker (although CARROT can accept activity data from most popular devices including Fitbits).  And the user’s personal activity data is protected and never shared with others.

Our clients also have the ability to use CARROT to promote other initiatives and incentivize participation in other wellness-related activities such as annual health screenings, healthy cooking presentations, weight-loss programs and fitness classes.

We have current clients who have used Virgin Pulse in the past. There are significant differences between our offerings.

First, CARROT is a 24/7/365 solution. People engage with our app regularly throughout the year, and that’s critical — because you can’t make increased movement a healthy habit with a simple one-month or 100-day program.

Second, CARROT’s platform allows the clients, their business partners and local merchants to offer incentives to the participants, enhancing engagement and essentially subsidizing the client’s rewards budget.

Third, CARROT’s patent-pending approach — using mobile gamification to motivate participants — is unlike anything in the marketplace.

Fourth, unlike Virgin Pulse, CARROT appeals to ALL members of the employee population by generating individualized activity goals which update daily.

Finally, CARROT is extremely affordable for organizations of all sizes. CARROT’s program is typically 75-80% less expensive than Virgin Pulse’s offerings for small businesses, and CARROT’s scalability as an entirely mobile solution makes its program attractive to large employers as a stand-alone initiative.

CARROT’s Software-as-a-Service business model includes a one-time setup fee of $2,500 per client, plus an annual “per employee per year” (PEPY) license fee which will be $12 PEPY beginning in January 2019.  

Discounts are provided to larger employers and for multi-year contracts. CARROT’s program pricing is about 75-80% less than similar offering by competitors.

Because of our mobile program’s scalability and low implementation costs, companies of any size can benefit from CARROT. The initial primary target market has been healthcare organizations and educational institutions. These industries are uniquely focused on wellness and are typically open to the innovative use of new technologies.

Further, having referenceable customers in these industries provides credibility and exposure needed to convert larger employers both within and outside of these industries. We will reach corporate wellness decision makers by having a significant presence at annual HR/benefits conferences, through membership in national wellness organizations, and through targeted digital marketing campaigns. These larger organizations — which can range from 2,500 to 40,000 employees — can have a sales cycle of 6-12 months.

Our next market of focus is self-insured companies with fewer than 1,000 employees. These buyers have a significant and urgent need to help their populations become healthier as health care costs continue to spiral upward. These small-to-mid-sized organizations typically make quicker decisions with normal sales cycles of 2-6 months. Essentially, CARROT will be a disruptive force in the workplace wellness market with a pricing strategy that is initially 60-90% less than conventional programs while delivering more than three times the engagement.

Because of its scalability, effectiveness and affordability, CARROT appeals to organizations of all sizes. We can onboard smaller organizations — those with 50-2,000 employees — through digital marketing. At the same time, we have had preliminary discussions with two of the auto industry’s larger employers who have expressed interest in using CARROT to engage up to 200,000 employees.

Henry Ford Health System, which piloted CARROT beginning in early 2016, was our first paying client, using the program to motivate its 25,000 employees for over two years. Today, Oakland University, the United Auto Workers International, DTE Energy, ITC Holdings Corp., The State Bank, Macomb County Government and about 20 other companies utilize CARROT’s program to drive healthier behaviors among their employees.

In January 2017, CARROT made its way into the global market when the employees of Takeda Pharmaceuticals began using the program in Switzerland and Finland. Their employees now participate in the CARROT program in 16 countries around the world.

CARROT was introduced as a population health program in April 2018 when Beaumont Health, one of Michigan’s largest health systems, launched a new community health & wellness initiative using CARROT as the high-tech centerpiece.

Because we’re an entirely digital program, we continue to reach potential new clients from around the globe. We currently have more than a dozen organizations is ferr 30-day trials of the program from all parts of the country.

A few of our current clients such as the UAW International and ITC Holdings Corp. have employees located in multiple states using the program. And Takeda Pharmaceuticals, based in Japan, now has employees participating in their CARROT program in 16 different countries around the world.

Once operating at that scale, we expect to become a target for acquisition by the major benefits management organizations, benefits brokers, health insurers, or fitness-related marketers, as such an acquisition would provide any of them a differentiated service offering.

We are seeking this additional capital to expand our sales, marketing & customer service activities.

We believe our this additional capital, combined with our recurring revenue and future revenues generated by a consumer-based “premium” version of the app, will allow us to achieve these milestones: 400 paying employers and 1M monthly active users by the end of 2020. Within five years, we project having 2M paid users with gross revenues of $70M and annual profits of $36.3M (EBITDA).