The population of the United States is aging in a profound way, helped along by a bolus of baby boomers now between 53 and 71 years of age.
It’s a huge opportunity for innovative startups, though it comes with a unique set of challenges. According to Parks Associates, some 115 million Americans will need caregiving assistance by 2020. That’s more than one in three. The question is not the market size, it’s what startups can do to tap into it.
At the conclusion of the 2017 AARP Innovation@50+ Live Pitch event, four experts in the field gave advice on how to approach the aging healthcare market. The panel included Ambar Bhattacharyya, managing director of Maverick Ventures; Missy Krasner, VP and managing director of healthcare and live sciences at Box; Alexander Morgan, principal at Khosla Ventures; and Lynne Chou O’Keefe, a partner at Kleiner Perkins Caufield & Byers.
Respect the duality of the market
Most products and services are designed for the senior citizen. Yet caregivers are often the ones making the purchasing decision.
“There’s an interesting duality here where you have the caregiver and the senior,” noted Chou O’Keefe. “It’s always one of those barriers that you have to be aware of: Who are you really selling to and how do you address both of these individuals in the consumer equation? Because I think they both have influences over the segment.”
The best consumer-facing products and services will win over both groups. With technology that can be hard. Founders need to enable and empower the senior, rather than simply monitoring and managing their behavior, she said.
As an example of striking that balance, Chou O’Keefe pointed to St. Petersburg, Florida-based Marvee, which is a ‘care companion’ platform for the Amazon Echo. As part of educating its users, CEO Heidi Culbertson said the startup gives daily tips, such as how seniors can ask the device to play a Frank Sinatra song. That creates an emotional connection between the senior and the technology and gives them an incentive to learn more and do more.
You don’t always have to start from scratch
Picking up on some of the startups that had pitched earlier, several of the experts noted that there are smart ways to use existing technologies and networks — like Marvee, which taps into the widespread use of the Amazon Echo.
Similarly, GoGoGrandparent serves as an add-on service to the rideshare apps Uber and Lyft. Those established companies take care of the software and driver logistics, so all GoGoGrandparent has to do is translate the experience for elderly users.
“You can focus a lot of your resources and time on ‘how do I make this solution customizable for this demographic,” noted O’Keefe.
Customer acquisition costs
For Ambar Bhattacharyya of Maverick Ventures, those resources need to be “laser-focused” towards CAC: customer acquisition costs.
For direct-to-consumer models, it’s critical to have a plan and a viable path to acquiring new customers. If this can’t be done effectively, there’s little chance the money invested will circle back.
“That’s a place where you can easily leverage a lot of work that’s already been done in the tech industry and for SEO, SEM, videos, whatever else you may need,” Bhattacharyya said.
Missy Krasner of Box reiterated the need for marketing. In her view, it’s not just about acquiring customers, it’s about getting a business-wide brand and development edge. For that reason, she encouraged the startups to create opportunities to go viral.
“If you can be really scrappy there I think that it will get a lot more attention faster,” Krasner said.
It’s not always easy to penetrate the senior healthcare market, though she noted human element press stories typically go far.
Short and sweet pilots
Bhattacharyya’s advice for startups developing a business-to-business (B2B) model was to not get caught up in the testing and proof-of-concept phase.
“One of the risks there is this death-by-pilot,” he said, noting that many startups get sucked into a never-ending string of pilots with hospital, payers and more.
“The pilot that never lands” chimed in emcee Lisa Suennen of GE Ventures, another veteran investor.
At the onset of a pilot, Bhattacharyya recommends setting specific benchmarks and terms that can be finalized at the conclusion of the pilot. This prevents situations in which the startup is forced to renegotiate the contract and start newer, bigger pilots.
“Just get it over and done with because these sales cycles on the B2B side are hard,” Bhattacharyya said.
A two-way street
All the judges stressed the need for startups to customize their products and services around the senior market. One company, AgeWell, excelled in this area.
“You’re basically leveraging the value of all of society to advance society,” remarked Alexander Morgan of Khosla Ventures.
Acknowledging the huge toll that loneliness takes on the senior demographic, AgeWell pairs mobile and healthy retirees with those that need regular check-ins and care. The service allows seniors to age-in-place with the necessary support, while the carers – called AgeWells – get financially reimbursed for their visits. Beyond that, the model helps to build relationships and a sense of community that improves everyone’s quality of life.
Other judges were also impressed. Krasner noted that it was building on a phenomenon that already happens organically.
“This kind of market is a high-touch human market,” she said. “To finally see some services-based companies that are actually trying to leverage neighbors or people that already know CPR, that is truly inspiring. I just don’t see that enough in Silicon Valley and, hey, that’s sort of what this community needs.”